The 2017 Tax Law and Your Museum

Category: Advocacy Alert
Photo of the U.S. Capitol building DC, Photo by E.Neely

Advocacy Alert – August 30, 2018

How is the 2017 Tax Law Affecting Giving to Your Museum?

The 2017 tax law vastly changed the charitable giving environment, lowering individual income tax rates, doubling the standard deduction, and increasing the gift and estate tax exemptions, among other items. The Charitable Giving Coalition (CGC), made up of hundreds of charities and associations–including AAM–involved in providing philanthropic services to communities across the country, is examining the impact of these tax changes on charitable giving throughout 2018 and beyond.

In coordination with CGC, we encourage you to complete this brief, 9-question survey about the need for services in your community and giving trends at your organization since the 2017 tax law took effect. AAM currently plans to collect this survey data quarterly.

Please respond by September 28.

This information will be used to communicate with policy makers, including members of Congress, about how the tax changes are affecting giving and whether or not additional legislation is warranted to revise the 2017 tax law and help increase giving. Your participation in the survey will help frame giving and service challenges in our communities.

UBIT: Changes in the 2017 Tax Bill

In addition to its expected impact on giving, other aspects of the new tax law on unrelated business income tax (UBIT) are proving challenging for nonprofit organizations, including museums, which AAM reported in AVISO earlier this year. At issue are two provisions that went into effect on January 1, 2018. Section 13702, amending Internal Revenue Code Section 512(a)(6), requires nonprofits with business income to pay the tax on each separate “trade or business” and prohibits using losses in one to offset profits in another (the “silo” rule). Section 13703, amending Internal Revenue Code Section 512(a)(7), imposes a 21 percent income tax (requiring quarterly filing of estimated taxes) on expenses nonprofits, including museums, incur for certain transportation and parking benefits provided to employees. Both provisions are causing significant confusion. On August 21 the Internal Revenue Service (IRS) issued Notice 2018-67 seeking comments regarding and offering interim guidance addressing the new law regarding UBIT.

AAM is a member of the UBIT Coalition of more than eighty diverse associations and organizations from across the country led by the American Society of Association Executives (ASAE) that is calling for a delay in the application of the new law. ASAE also provided a brief analysis of the IRS’ interim guidance. In addition, legislation has been introduced in the House and Senate to repeal these provisions. AAM seeks to raise awareness about these provisions that could apply to your museum and will continue to work with the UBIT coalition for their delay and repeal.

In the meantime, let us know how the new law will affect your museum.

Questions or additional information to share? Contact us.

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