Nonprofits Request Delay in New UBIT Rules Implementation

Posted on 05.29.18

Nonprofits Request Delay in New UBIT Rules Implementation

By Jayme Mika, CPA | Tax Manager | Not-For-Profit Industry Team

The newly enacted Tax Cuts and Jobs Act has two subsections that are causing nonprofit representatives to ask the IRS and Treasury to delay implementing the new Unrelated Business Income Tax (UBIT) rules until after guidance is published.


  • Section 512(a)(6) requires exempt organizations to calculate their unrelated business income separately for each business activity but it does not define what constitutes a separate trade or business. 
  • Section 512(a)(7) uses unrelated business income tax liability to tax expenses for employee fringe benefits (parking and transportation benefits) without explaining the procedures or calculations necessary.

Because of the ambiguity of these two subsections, nonprofit representatives are asking the Treasury and the IRS to delay their implementation until one year after final regulations are issued. However, the delay should be retroactive to January 1, 2018.

We will continue to monitor the proposed changes and keep you updated on what to expect following any decisons. Questions on unrelated business income tax? We can help. Contact a member of the Not-For-Profit team or Email | 804.747.0000


Additonal Not-For-Profit Resources:

How will the General Data Protection Regulation (GDPR) impact Not-for-Profit organizations?

Charitable Giving Under the Tax Cuts and Jobs Act of 2017

Charitable Contributions: Changes with the New Tax Law

New Rule for Tax-Exempt Not-For-Profit Organizations with Unrelated Business Taxable Income

Tax Cuts and Jobs Act Resource Guide

The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Posted by: Jayme Mika, CPA

Jayme is a member of our not-for-profit industry team and applies her industry insights to provide tax advice and opportunities to the Firm’s not-for-profit clients. Her client base includes associations, foundations, community based housing organizations, religious organizations, historical preservation organizations, and private education institutions. Her services include Form 990 preparation, tax compliance, planning, consultation, and research. Other areas of expertise with the Firm include consulting, planning and compliance for individuals and families with closely held entities, partnerships, and S-corporations.

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