As you know, the Tax Cuts and Jobs Act enacted at the end of 2017 imposes an unfair — and confusing — 21% unrelated business income tax on the expenses that tax-exempt nonprofits incur for providing their employees with transportation fringe benefits, such as parking and transit passes. As a result, nonprofits, foundations, and churches must pay this new tax not only on the amount of direct expenditures they make, but also on the amount that their employees have withheld from their paychecks on a pre-tax basis.
For example, imagine that your organization spends $100 per month to buy bus passes for a few staff members. Other staff have arranged to have part of their paycheck withheld and used to pay for parking - let’s say these employees use a total of $200 per month this way. Your organization must now pay $756 per year in taxes.
As we near the end of the first quarter of the year, some nonprofits have already been forced to stop providing such benefits. Others are finding ways to pay the new taxes. Still others are waiting to see how it will play out in Congress. This makes March a crucial time for our state’s senators to act.
This new tax is diverting money away from already-scarce unrestricted funds and making it more difficult for nonprofits to support their staff. And, because it applies to houses of worship and other nonprofits that aren’t required to file 990s, it’s also causing compliance nightmares.
The good news is that last week a bill was introduced in Congress to repeal this tax on nonprofits. The bill is the Lessening Impediments From Taxes (LIFT) for Charities Act and is being brought by both Democrat and Republican members of Congress. Because it has bipartisan support, it has been introduced in both the House and Senate with the hope that it will get through Congress quickly.
How can you help?
Our senators — Senator Feinstein and Senator Harris — need to hear from the nonprofit community – you! – that this unfair and confusing tax is hurting your organization and community. CalNonprofits has sent them letters conveying what we’ve heard from nonprofits and urging them to become co-sponsors of the LIFT for Charities Act. Below is some sample language to use when you call or email their offices, as well as a sample Twitter post.
Senator [NAME] there is absolutely no dispute, partisan or otherwise, that the LIFT for Charities Act is urgently needed for the sake of our communities and your constituents. On behalf of the nonprofits in California, we ask you to co-sponsor S. 632 and sending a clear signal that you and the Senate are standing with the organizations upon which all of your constituents rely.
Contact Information
Senator Dianne Feinstein’s office: (202) 224-3841
Senator Kamala Harris’ office: (202) 224 - 3553
Email Dianne Feinstein through her website here
Email Kamala Harris through her website here
Twitter
.[Senator’s Twitter Handle] The LIFT for Charities Act repeals an unfair and confusing tax on nonprofits and houses of worship - it's urgently needed for the sake of our communities and your constituents. Please co-sponsor S.632! @CalNonprofits
Dianne Feinstein’s Twitter handle is @SenFeinstein
Kamala Harris’ Twitter handle is @SenKamalaHarris
And if you have time, let us know what response (if any) you get to your calls, emails, and tweets in the comments below.
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Examples of CalNonprofits’ recent advocacy successes:
- We led the effort to stop AB 2855, a bill in the California legislature that would have required nonprofits to place unnecessary and burdensome notices on every document that included a fundraising message -- not just California nonprofits but any nonprofit that attempted to raise funds in California. In just two months, we mobilized more than 700 nonprofit organizations to speak up to oppose this bill, an unprecedented show of solidarity. This was truly a team effort that showed the power of the nonprofit community.
- We made it easier for nonprofits to do business. We championed AB 327 which extends for another seven years an exemption to state prevailing wage rules for work performed by volunteers and AB 556, which alters the definition and disclosure of commercial fundraisers in an effort to improve transparency for interested donors.
- We helped craft a motion, unanimously passed by the Los Angeles County Board of Supervisors, directing its county executive to develop recommendations on how county government will implement the provisions of the OMB Uniform Guidance related to paying reasonable indirect costs of nonprofit services with federal funds. This has led to a series of meetings between the county executive, nonprofits and philanthropic leaders to design effective implementation policies.
- We put nonprofits at the table by actively supporting Senator Leno’s bill to increase the minimum wage for all Californians, and by advocating and negotiating with local governments to win minimum wage increases in Los Angeles City and County.
- We work to ensure that Californians have full access to voting, and that's why we threw our support behind AB 1461, the California New Motor Voter Program to automatically register voters when they obtain or renew a drivers license or receive a state identification card.
