NAFCU explains excise tax reporting in new blog, seeks legislative fix
A new NAFCU Compliance Blog post out today provides resources to help credit unions report the 21 percent excise tax on excess executive compensation, which was implemented under the Tax Cuts and Jobs Act (TCJA). NAFCU's Carrie Hunt also met Friday with other industry trades to discuss a possible legislative fix to ensure parity between for-profit and not-for-profit corporations.
Hunt, NAFCU's executive vice president of government affairs and general counsel, continues to work with the coalition, including the American Society of Association Executives (ASAE), to push for a legislative fix to the issue. The TCJA contained a provision allowing for-profits to grandfather in binding contracts in effect before enactment, but did not include the same clause for not-for-profit tax-exempt organizations.
NAFCU urged the House to include the fix in its year-end tax bill passed in December. 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 today's Compliance Blog post, NAFCU Regulatory Compliance Counsel David Park explains how credit unions should report the tax based on interim guidance from the Treasury Department and IRS.
"In the interim guidance, the Treasury Department and the IRS note that the excise tax should be reported and paid on Form 4720, Return of Certain Excise Taxes Under Chapter 41 and 42 of the Internal Revenue Code," Park writes. "The instructions for Form 4720 can be found here. The tax must be paid and the form filed by the 15th day of the 5th month after the end of the credit union's taxable year.
"So if your credit union has a taxable year that ends December 31st, the deadline to pay the tax and file the Form 4720 is May 15th," Park adds.
NAFCU will continue to work to obtain a legislative fix on this issue. Read the full Compliance Blog post here.