Tax Tips for Higher Education

Filing Form 990-T and Paying the “Parking Tax”

Filing Form 990-T and Paying the “Parking Tax”

MBC has a “faculty & staff only” dirt (well, sand and crushed oyster shell) parking lot that has room for 22 vehicles. Three times a year, due to heavy rains, MBC has this parking lot graded to ensure proper drainage (akin to snow removal in other climes). The cost is $800 per grading – $2,400 annually. Convinced that they will ultimately owe $294 in tax ($2,400 – $1,000 x .21 for the ended June 30, 2019 – using the 2018 Form 990-T), their Controller calls us to ask about filing the Forms 990-T for 2017 and 2018. Note that for the six month period in 2018 (1/1/18 – 6/30/18) the amount would depend upon the amounts “paid or incurred” – how many times they graded the lot – but the tax rate would still be 21%. Also note that MBC’s Form 990-T (2017 form) is due November 15, 2018, but can be extended for six months using Form 8868.

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Form 1098-T Penalties – Still?

Form 1098-T Penalties – Still?

In order to comply with Internal Revenue Service (IRS) requirements to report tuition payments and other information on Form 1098-T, higher education institutions need to collect students’ taxpayer identification numbers (TINs). For most students, their TIN is their Social Security number (SSN). Students who are not eligible for an SSN may have an individual taxpayer identification number, known as an ITIN.

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Tax Reform: How Do We Handle Investments?

Tax Reform: How Do We Handle Investments?

ISSUE: The new Internal Revenue Code Section 512(a)(6) requires “silo-ing” of unrelated business activities. For those institutions that receive K-1’s from partnerships, how will the silo-ing work? SITUATION: Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(i). They are required to file Form 990 annually. DCC’s CFO calls us to ask about how they will report income from the various line items on the Schedule K-1’s (Form 1065) that the college receives from investment partnerships. “I’ve heard that the IRS has prescribed the use of the 6-digit NAICS codes. Aren’t there about 1,000 of those?”

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Looking to the Future?  Might this Work?

Looking to the Future? Might this Work?

Idaho Bible College and Seminary (IBCS) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(i). They are not required to file Form 990 annually. But, for the first time, they may be required to file Form 990-T! IBCS’s Accounting Team has been closely watching the issue of “imputed income” for employee parking (and other fringe benefits) issue included in Internal Revenue Code Section 512(a)(7) as imposed upon us by the “Tax Cuts and Jobs Act” of 2017. They call us – full of incredulity – to ask, “Are we seriously going to have to pay taxes on expenses we’ve made for employee parking? That makes no sense.”

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Parking and UBIT: Where We Are Today

Parking and UBIT: Where We Are Today

ISSUE: It appears that the IRS may be close to providing guidance on the “pay taxes on your costs of employee parking” provision in I.R.C. Section 512(a)(7) – and it may include penalty relief. SITUATION: Marathon Bible College (MBC) 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. MBC’s Accounting Team has been closely watching the issue of “imputed income” for employee parking (and other fringe benefits) issue included in Internal Revenue Code Section 512(a)(7) as imposed upon us by the “Tax Cuts and Jobs Act” of 2017. This is one of the hottest issues for Christian colleges (and all not-for-profit organizations) of 2018. It is kind of shocking that we are into October with no clear guidance on this issue. [For more context, see Tax Tips on June 27, 2018 – “Qualified Parking as UBIT, Part 2”]

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