House passes bill with CUNA-backed UBIT repeal

The House passed the Retirement, Savings, and Other Tax Relief Act (H.R. 88) Thursday, a bill that makes a CUNA-backed change to Unrelated Business Income Tax (UBIT). H.R. 88 contains a provision that would eliminate the new UBIT on not-for-profit transportation and athletic facilities fringe benefits.

The Tax Cuts and Jobs Act requires tax-exempt organizations currently subject to UBIT (which includes state-chartered credit unions) to pay a 21% tax on certain employee fringe benefits, such as transportation and parking benefits.

The guidance states that the tax-exempt sector can use “any reasonable method” for 2018 to determine the increase in UBIT and provides a safe harbor method.

If H.R. 88 is signed into law, the UBIT would be eliminated, making the guidance unnecessary.

The House also passed the Taxpayer First Act of 2018 (H.R. 7227), which contains provisions that would impact credit unions. Detailed analysis of both bills can be found on CUNA’s Removing Barriers Blog.