100 Peachtree Street NW Suite 1500 Atlanta GA 30303 September 24, 2018 Senator Johnny Isakson 131 Russell Senate Office Building Washington, DC 20510 Representative Karen Handel 1211 Longworth House Office Building Washington DC 20515 Senator David Perdue 455 Russell Senate Office Building Washington, DC 20510 Representative Jody Hice 1516 Longworth House Office Bldg Washington, DC 20515 Representative Rick W Allen 426 Cannon House Office Building Washington, DC 20515 Representative Henry Johnson Jr 2372 Rayburn House Office Building Washington, D.C 20515 Representative Sanford Bishop Jr 2429 Rayburn House Office Building Washington, DC 20515 Representative John Lewis 343 Cannon House Office Building Washington, DC 20515 Representative Buddy Carter 432 Cannon House Office Building, Washington, DC 20515 Representative Barry Loudermilk 329 Cannon House Office Building Washington, DC 20515 Representative Doug Collins 513 Cannon House Office Building Washington, DC 20515 Representative Austin Scott 516 Cannon House Office Building Washington, DC 20515 Representative Drew Ferguson 1032 Longworth House Office Building Washington, DC 20515 Representative David Scott 225 Cannon House Office Building Washington, DC 20515 Representative Tom Graves Rayburn House Office Building, 2442, Washington, DC 20515 Representative Rob Woodall 1725 Longworth House Office Building Washington, DC 20515 Dear Members of the Georgia Congressional Delegation, On behalf of Georgia’s non-profit sector we write to express significant concerns about challenges that tax-exempt organizations are experiencing in attempting to comply with new Internal Revenue Code Sections 512(a)(6) and 512(a)(7), enacted as part of the Tax Cuts and Jobs Act (Public Law No 115-97) Since April 2018, charitable organizations, houses of worship, universities and foundations across Georgia have raised questions and submitted substantive statements to the Department of Treasury and the Internal Revenue Service about the very pressing need for guidance before nonprofits can comply with the new requirements Employing approximately 10% of Georgia’s workforce, these entities run the gamut from small, volunteer-run organizations to the largest non-profits in the state, including the members of the Georgia Independent College Association (Emory, Agnes Scott, Morehouse, Young Harris, Brenau, and more); the Georgia Hospital Association’s tax-exempt member hospitals and health-systems, (from large, urban systems to small rural hospitals across the state); as well as Georgia Center for Nonprofits’ (GCN) membership including entities as large as Woodruff Arts Center, Goodwill, and the Boys and Girls Clubs, as well as local service agencies such as the Greater Augusta Arts Council and the Athens Community Council on Aging As Treasury works to implement the Tax Cuts and Jobs Act, we ask for your assistance in two areas Support legislation that seeks to remove the new taxes on non-profits • • Two bills would repeal both the tax on certain fringe benefits and the requirement that unrelated business taxable income be computed separately for each trade or business activity: o S 3317, the Protect Charities and Houses of Worship Act by Senator Ted Cruz (R-Tex.) o H.R 6037, the Nonprofits Support Act, by Rep Mike Conaway (R-Tex.) Three bills would repeal the tax on certain fringe benefits: o S 3332, the Lessening Impediments from Taxes (LIFT) for Charities Act, by Senator James Lankford (R-Okla.) o H.R 6460, the House companion to the LIFT for Charities Act, by Rep Mark Walker (R-N.C.) o H.R 6504 The Stop the Tax Hike on Charities and Places of Worship Act, by Rep James Clyburn (D-S.C.) Rationale: As an unintended consequence of the new IRC subsections 512(a)(6) and (7) contained in the Tax Cuts and Jobs Act, Treasury’s regulatory attempt to create parity among investor-owned companies and non-profits is damaging to the non-profit sector From education to healthcare and senior services, Georgia’s non-profits are vitally important to providing a sound economic future for our state Investor-owned companies received significant tax cuts under the Tax Cuts and Jobs Act, but non-profit entities face new or increased taxes on the valuable community services they provide Every penny non-profits spend on taxes means less tutoring of elementary students, reductions in the number of meals for seniors, and fewer scholarships for enterprising middle- and lower-income students who demonstrate promise-to name a few of the effects Ask Treasury for a delay in implementing UBIT The unintended consequences of the Tax Cuts and Jobs Act on Georgia’s non-profits is significant, specifically as it relates to Unrelated Business Income Tax (UBIT) The new tax law imposes on charitable non-profits, houses of worship, colleges, foundations, and other nonprofits significant new tax liabilities by (1) requiring that UBIT be calculated separately for each “unrelated trade or business” (Section 512(a)(6)) and (2) deeming amounts paid for qualified transportation benefits provided to employees, such as transit passes and parking, to be treated as unrelated business (Section 512(a)(7) In order to provide time to plan and budget for this new tax on non-profits, we ask for you to urge Treasury to immediately delay implementing those two new UBIT subsections until at least one year after Final Rules are promulgated Rationale: The non-profit community has grave concerns about the implementation of new subsections 512(a)(6) and (7) of the Internal Revenue Code and believes that Treasury and the IRS have a duty to the regulated community to provide immediate relief and substantive guidance on these provisions The 21% UBIT that non-profits are now liable for was not adopted until what is the mid-fiscal year for many non-profits; therefore, those entities were unable to budget for such liabilities, which certainly has a significant and disproportionate impact on the financial stability of smaller non-profits With the ambiguity of the new law and the short notice, non-profits have not had time to adequately assess the full burden, both fiscal and administrative, of the new law and make appropriate provisions Many tax-exempt organizations are just now beginning to learn about the changes in the tax law that went into effect at the first of the year Absent explicit guidance from Treasury and the IRS on these two subsections, tax-exempt filers will continue to be confused and either miss filing deadlines or file inaccurate returns through no fault of their own Quarterly tax payments are already past due for many non-profits, but no one – not accountants, lawyers, or non-profit leaders – can say with certainty what is and is not covered by the new tax because Treasury and the IRS have not provided necessary guidance Many tax-exempt organizations are just now beginning to learn about the changes in the tax law that went into effect at the first of the year Many more non-profits may be unaware of this new tax, and may have never had to file Form 990-T nor pay UBIT; this is especially true for houses of worship – particularly those in urban areas – which pay for clergy and staff parking but have never previously had to file any version of the Form 990 with the IRS Without a targeted outreach initiative from the IRS, it is unlikely that these organizations will be aware of the need to file Form 990-T or pay UBIT, as a result, some organizations could become liable for failure to file Form 990-T and pay UBIT on expenses that they could not reasonably have been expected to know are taxable Thank you for your previous support of the non-profit sector and for your consideration of the issues raised If the Georgia non-profit community can be of any assistance as Treasury works to create regulatory guidance or Congress continues its work on tax reform, we stand ready to engage Please let us know if you have any questions Sincerely, Karen F Beavor, CEO Georgia Center for Nonprofits On behalf of: Georgia Hospital Association Georgia Independent College Association Southeastern Council of Foundations And the undersigned members: • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • A Step Closer Abba House Perry Inc Adult Disability Medical Home Agnes Scott College American Jewish Committee Andrew College Arms Wide Open Atlanta Ballet Atlanta Center for Self Sufficiency, Inc Atlanta Community Food Bank Atlanta Film Society Atlanta Volunteer Lawyers Foundation ATLANTA YOUNG SINGERS Atlantic Area Court Appointed Special Advocate (CASA), Inc Augusta Heritage Academy, Inc B.E.S.T HOMES INC BBBS Bearings Bike Shop Becoming a Welder, Inc Berry College Beulah Heights University Beyond Limits Big Brothers Big Sisters of Metro Atlanta Big Brothers Big Sisters of the Heart of Georgia Breakthrough Atlanta/The Lovett School Brenau University Brewton-Parker College Brooks, McGinnis & Company BUCKHEAD CHRISTIAN MINISTRY, INC C4 Atlanta Inc CAC Community Assistance Center CalmUnity Expressives Camden/Charlton County Board of Realtors® CARE Catholic Charities Atlanta CHANGED LIVING RECOVERY RESIDENCE, INC CHRIS 180, Inc Christian Fellowship of Agents Inc Clark Atlanta University Collaborative Training Company LLC Columbia County Community Connections Columbus Symphony Orchestra Common Good Data • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Community Assistance Center Community Foundation of West Georgia Community Resource Center of Newton County Inc DBA FaithWorks Compassionate Atlanta Concerned Nkrumaists of North America Covenant College Dad's Garage Theatre DCCM Decatur Cooperative Ministry Dian Fossey Gorilla Fund International Eagle Soar High Foundation Eagle's Landing Christian Counseling Center, Inc Early Emory EarthShare of Georgia Eco Addendum Elks Aidmore, Inc Emmanuel College Emory University Excel Youth Academy FaithBridge Foster Care Family Theatre Feminist Women's Health Center First Choice Primary Care Flux Projects Frazer Center Garrick Creative Group, Lexington Garrick Artworks George Leile Visions, Inc Georgia State Soccer Association Georgia United Methodist Foundation Girl Scouts of Greater Atlanta Girl Talk, Inc Giving Kitchen Global Teen Challenge Global Village Project, Inc Good Shepherd Clinic GOODWILL OF NORTH GEORGIA GUIDE, Inc H.O.P.E Family Resource Center Inc Habitat for Humanity DeKalb Habitat for Humanity of Bulloch County Hancock CDC Harland Charitable Foundation Harmony House Domestic Violence Shelter Healthy Mothers, Healthy Babies Coalition of Ga Hemophilia of Georgia • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Herndon Home Museum High Museum of Art Hillside, Inc HomeAid Atlanta Horizon Theatre Company Horse-N-Around Inc HOSEENU, Inc Hospice of the Golden Isles I HOPE INC Idea Alchemy Consultants Innovative Solutions for Disadvantage and Disability, Inc Jesse's House Jewish Federation of Greater Atlanta Jones and Kolb, CPAs Kenny Leon's True Colors Theatre Company KFB Virtual Business Consultants LaGrange College Lekotek of Georgia, Inc Life University LifeWorkz Global, Inc Literacy Action Macon Urban Ministries, Inc Mary Hall Freedom House Matthew Reardon Center for Autism, Inc Mercer University Mercy Housing Southeast Michael C Carlos Museum of Emory University Milestone Housing Initiative, Inc Money Management International, Inc More than conquerors, Inc Morehouse College Morehouse College Moving in the Spirit, Inc New American Pathways Newnan-Coweta Habitat for Humanity NID Housing Counseling Agency North Georgia Community Foundation Northeast Georgia Council on Domestic Violence Odyssey, Inc Oglethorpe University Okefenokee Heritage Center One Small Change Inc Other Side of the Bars Pathways Theological Education Pebble Tossers Pedestrians Educating Drivers on Safety, Inc • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Peyton Anderson Foundation Phenomenal Women’s Health, Inc Piedmont College Point University Positive IMPACT Health Centers Positive Impact of Duluth Ga Prevent Blindness Georgia Priscilla Smith Productions Red Carpet Kids Reinhardt University Restore TO Empower INC Sassy Moms Savannah State University Foundation Second Wind Dreams Inc Share the Magic Foundation Shepherd Center Shorter University Simple Needs GA Southeastern Trust for Parks and Land Southern Center for Human Rights Southwest Georgia United Empowerment Zone, Inc Spelman College St John UMC St John United Methodist Church Child Development Center St John's Church, in Savannah Summers.Solutions The Augusta Players, Inc The Carter Center The Eagles Nest of Columbus, GA Youth Complex The Fuller Center for Housing The Georgia Lions Lighthouse Foundation The Glynn Community Crisis Center, Inc The Liberty County Re-Entry Coalition The Museum of Contemporary Art of Georgia (MOCA GA) The Peyton Anderson Foundation, Inc The Wynn House Théâtre du Rêve Thomas University Toccoa Falls College Trees Atlanta Truett McConnell University Uniting Hope CHildren Wesleyan College Win Win Equine Services and Therapy, Inc WEST Woodward Academy Work for Good • • • • • • World Relief Atlanta Worldwide Syringomyelia & Chiari Task Force Young Harris College Youth Ensemble of Atlanta youthSpark, Inc YWCA of Greater Atlanta ... investor-owned companies and non-profits is damaging to the non-profit sector From education to healthcare and senior services, Georgia’s non-profits are vitally important to providing a sound economic... tax on non-profits, we ask for you to urge Treasury to immediately delay implementing those two new UBIT subsections until at least one year after Final Rules are promulgated Rationale: The non-profit... Georgia Lions Lighthouse Foundation The Glynn Community Crisis Center, Inc The Liberty County Re-Entry Coalition The Museum of Contemporary Art of Georgia (MOCA GA) The Peyton Anderson Foundation,