Nonprofits Call on Treasury/IRS to Delay Implementation of Ambiguous UBIT Provisions of New Tax Law

Nonprofits Call on Treasury/IRS to Delay Implementation of Ambiguous UBIT Provisions of New Tax Law

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Washington, DC - The National Council of Nonprofits submitted a letter to the Department of Treasury and the Internal Revenue Service today calling for guidance and delayed implementation of unrelated business income tax provisions of the new tax law. Specifically, the letter stresses: “To avoid manifest injustice, taxpayer confusion, ineffective assistance of tax practitioners, and risky speculation and filings of potentially inaccurate and/or unnecessary forms by hundreds of thousands of nonprofits, Treasury and the IRS need to delay implementation of these provisions until at least one year after Final Rules have been promulgated.”

The authors of the letter made the following statements:

Jennifer Chandler, Vice President: “Nonprofits are at risk because Treasury and the IRS have not provided any guidance on how to comply with the new UBIT-related provisions of the tax bill. It is incumbent upon the federal government to delay implementation until after formal regulations are issued so that the many charitable nonprofits, houses of worship, and foundations that are affected can know what the ambiguous new provisions actually tax so they can compute what their tax liability is. Right now, the provisions that impose an income tax on expenses relating to employees’ transportation benefits and that direct nonprofits to pay tax on each “separate trade or business” are so vague that compliance is impossible. Meanwhile the tax clock is running, and nonprofits are at risk of penalties for late filing. Most distressing is that it appears these provisions will impose significant costs and record-keeping burdens on nonprofits, making it harder for nonprofits to address their charitable missions and more difficult to recruit and retain employees.”

David L. Thompson, Vice President of Public Policy: “The comments we filed today highlight the dozens of questions that nonprofits – large and small, from all regions of the country – are raising, but for which no answers have been forthcoming from the Department of Treasury and the IRS. Every day, the tax liability of America’s tax-exempt organizations may be rising higher and higher, but these hardworking nonprofits dedicated to addressing their communities’ needs have no way to calculate how much they owe. It would be patently unfair to penalize taxpayers with late-filing fees for inaccurate filings or innocent underpayment caused by lack of guidance from the government. The only rational solution to this train wreck is for Treasury and the IRS to announce a delay in implementing the new provisions until one year after the government promulgates Final Rules that provide clarity and straightforward answers to the real-world challenge we present today.”



The National Council of Nonprofits (Council of Nonprofits) is a trusted resource and proven advocate for America’s charitable nonprofits. Connecting the policy dots across all levels and branches of governments, the Council of Nonprofits keeps nonprofits informed and empowered to create a positive public policy environment that best supports nonprofits in advancing their missions. Working with and through the nation’s largest network of nonprofits – with 25,000-plus organizational members - we identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve.

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