ABHE Blog

ISSUE:

The Internal Revenue Service has released the standard mileage rates for the coming year.

SITUATION:

Idaho Theological Seminary (ITS) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are not required to file Form 990 annually.

ITS’ Controller called to ask a common, yearly question for this time of year:

“Has the IRS published the 2022 standard mileage rates yet?”

“As a matter of fact, yes they have,” we answered.  “The rates are as follows:

58.5 cents per mile for business purposes
18 cents per mile for medical purposes (the moving expenses deduction is not available for 2022)
14 cents per mile for charitable purposes (set by statute, thus does not change annually)

RULES:                                                                        .

From IRS Notice 2022-03, Section 3:

The standard mileage rate for transportation or travel expenses is 58.5 cents per mile for all miles of business use (business standard mileage rate). See section 4 of Rev. Proc. 2019-46. However, § 11045 of the Tax Cuts and Jobs Act, Public Law 115- 97, 131. Stat. 2054 (December 22, 2017) (the “TCJA”) suspends all miscellaneous itemized deductions that are subject to the two-percent of adjusted gross income floor under § 67, including unreimbursed employee travel expenses, for taxable years beginning after December 31, 2017, and before January 1, 2026. Thus, the business standard mileage rate provided in this notice cannot be used to claim an itemized deduction for unreimbursed employee travel expenses during the suspension.

ISSUE:

Lately, there has been a lot of conversation about “gaming.”  If a college holds a raffle, does that need to be reported on Schedule G (Form 990), Part III?  And might the raffle generate unrelated business income?  Back in 2018, the IRS gave us an “Issue Snapshot” on Gaming.  The IRS begins this piece with, “The conduct of gaming by tax-exempt organizations may result in unrelated business taxable income.”

SITUATION:

Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

The DCC Accounting Team was meeting with us via Zoom to talk about our upcoming, six-month interim audit work for June 30, 2022.  In the conversation, DCC’s CFO wondered about their planned raffle that is scheduled to take place in April 2022.

“There are really two issues with gaming activities,” we said.  “First, is it gaming for Form 990 purposes.  Second, might the activity be considered an unrelated business activity.  As to gaming, we should look at the definition in the glossary of the Form 990 instructions.  With the UBIT issue, the IRS actually released an ‘Issue Snapshot’ on gaming a few years ago.  Also, remember that ‘gaming’ activities will generally need to be reported at Form 990, Part VIII, Line 9 and on Schedule G (Form 990), Part III.  And remember, the only ‘gaming’ activity that is specifically excluded from UBI is bingo.”

“Sounds great.  We will look at those resources and let you know if we have any questions.”

“Merry Christmas!”

The glossary of the 990 instructions (2020) defines gaming as:

ISSUE IRS's Tax Exempt & Government Entities (TE/GE) Division has released its fiscal year 2022 program letter which highlights the Service’s priorities and expectations - and aligns with the agency's overall strategic goals.  The IRS’ strategic goals are: ...

ISSUE

With myriad IRS “Frequently Asked Questions” (FAQs) issued, updates to FAQs, and further clarifications to FAQs swirling around in the wake of Coronavirus legislation/funding, what happens if a taxpayer relies on an FAQ – only to have it changed later?  Will they be subject to penalties?

SITUATION:

Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

The CFO at DCC called to ask us about some updates/changes to IRS FAQs on recently enacted legislation…

“What if we rely on FAQs that were promulgated by the IRS and then those rules are subsequently updated in a manner that contradicts the original guidance?  Will we potentially subject to penalties and interest if applicable?”

“That is a great question.  As usual, documentation is key.  The IRS issued a ‘News Release’ a few weeks ago to clarify that if a taxpayer relies on any FAQ in good faith and that reliance is reasonable, the taxpayer will have a “reasonable cause” defense against any negligence penalty or other accuracy-related penalty if it turns out the FAQ is not a correct statement of the law as applied to the taxpayer’s particular facts.  In addition, the IRS is systematically ‘cataloging’ all of their FAQs on their website in separate ‘Fact Sheets.’  These documents will be dated and sorted in order to make them easy to locate.  This will allow taxpayers to find – in date order – the FAQs they might have relied upon.”

“That sounds great.  How about the Department of Education?  Have issued similar information about their FAQs?”

“Not as of yet.  But we hope that ED will be forthcoming with something like this in the near future.”

ISSUE: On September 10, 2021, the IRS updated its frequently asked questions (FAQs) on the procedure for obtaining an Individual Tax Identification Number (ITIN).   SITUATION: Troas Bible College (TBC) is a private college exempt under Internal Revenue Code...

Section 2301 of the CARES Act, as originally enacted, provides for an employee retention credit for eligible employers, including tax-exempt organizations, that pay qualified wages, including certain health plan expenses, to some or all employees after March 12, 2020, and before January 1, 2021. Section 206 of the Relief Act adopted amendments and technical changes to section 2301 of the CARES Act for qualified wages paid after March 12, 2020.  Section 207 of the Relief Act, which is prospective only, further amends section 2301 of the CARES Act to extend the application of the employee retention credit to qualified wages paid after December 31, 2020, and before July 1, 2021, and to modify the calculation of the credit amount for qualified wages paid during that time.  Subsequent rulings extended the ERC through December 31, 2021.

ISSUE: Revenue Procedure 2021-33 provides a safe harbor permitting employers to exclude certain amounts from gross receipts solely for determining eligibility for the ERC. These amounts are:     The amount of the forgiveness of a Paycheck Protection Program...

ISSUE:

Section 1018 of  Public Law 116-315,  Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020, adds new requirements for educational institutions participating in the educational assistance programs of the Department of Veterans Affairs (VA). These new provisions became effective June 15, 2021 and will apply to Institutions of Higher Learning and Non-College Degree institutions beginning August 1, 2021. Many of the requirements are consistent with the requirements of the Principles of Excellence, currently in Executive Order 13607; however, there are requirements in addition to those embodied in the Principles of Excellence which schools must also satisfy to maintain approval for GI Bill® participation.

The IRS is experiencing delays in processing paper returns, including Form 8868, Application for Extension of Time To File an Exempt Organization Return.