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As the House this week continues work on its tax extenders and fixes package (H.R. 88), NAFCU Vice President of Legislative Affairs Brad Thaler wrote leaders of the tax-writing committee urging that a technical fix be provided to the Tax Cuts and Jobs Act (TCJA) so a 21 percent excise tax is not imposed on certain not-for-profits in any year-end tax bill.

More specifically, Thaler asked that a fix be provided to "grandfather" those employment contracts entered into on or before Nov. 2, 2017, for tax-exempt employers. The TCJA contained a provision allowing for-profits to grandfather in binding contracts in effect before that date, but did not include the same clause for not-for-profit tax-exempt organizations.

At NAFCU's urging, H.R. 88 was revamped by House Ways and Means Committee Chairman Kevin Brady, R-Texas, to include a NAFCU-sought provision that repeals the excise tax imposed for fringe benefits, such as transportation and parking, but it does not alter the tax on executive compensation.

NAFCU has repeatedly reached out to and met with members of Congress to seek relief for credit unions from this new tax imposed on certain not-for-profits.

In a recent update to members, NAFCU President and CEO Dan Berger noted the association's work to protect credit union interests following the enactment of the TCJA, including meeting with Capitol Hill leaders and the IRS. NAFCU has also opposed efforts to require all credit unions file a Form 990-T.

Brady's revised H.R. 88 also includes provisions that would delay and repeal certain taxes under the Affordable Care Act and ease restrictions on political activity by churches and other nonprofits, among other changes. Portions of the original bill relating to disaster tax relief, retirement savings, IRS improvements and corrections to the TCJA remain.

This week, the IRS issued an interim final rule to implement the TCJA's changes to the treatment of parking-fringe expenses for tax-exempt organizations subject to unrelated business income tax (UBIT), which includes state-chartered credit unions.

NAFCU will keep credit unions updated on the status of this bill.