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ICYMI: Provision to repeal fringe benefits excise tax in House bill
Following NAFCU's advocacy efforts, the House Ways and Means Committee last week advanced legislation that included a provision to repeal the 21 percent excise tax imposed on certain fringe benefits offered by not-for-profits. However, lawmakers did not address NAFCU's concerns about the excise tax on executive compensation in the Economic Mobility Act (H.R. 3300).
Last year, NAFCU worked with the House to have a similar provision related to fringe benefits included in its year-end tax bill, but the Senate never took action on the bill.
In a letter sent last week, NAFCU's Vice President of Legislative Affairs Brad Thaler shared the shared the association's support of the included provision: "We were pleased that the TCJA protected and maintained the exemption for credit unions from federal income tax. Credit unions provide checks and balances in the marketplace and share your goal in creating a vibrant American economy."
NAFCU also urged committee members to include a technical correction in the bill that would fix a disparity regarding executive compensation contracts at not-for-profits versus for-profits; the association has consistently urged Congress to address this issue. However, NAFCU anticipates that there will be no further amendments added to H.R. 3300 as it moves to the full chamber and the executive compensation tax will remain law. The association will continue to seek relief for credit unions from this tax imposed on certain not-for-profits.
Following the enactment of the TCJA, NAFCU worked with worked with the IRS to obtain more reporting guidance for credit unions. In December, the IRS issued interim guidance on how to report the tax; a NAFCU Final Regulation provides additional context. The IRS also recently clarified that that Form 4720 – the form federal credit unions must submit related to the excise tax on excess executive compensation – is not subject to public disclosure unless filed by a private foundation. NAFCU's Compliance Blog further explains the filing implications.
NAFCU will continue to monitor the bill and keep credit unions updated on any new developments.