FY 2015 budget - Tax provisions concerning exempt organizations  

March 5: The Obama Administration’s FY 2015 budget includes provisions that concern or would affect exempt organizations and the non-profit sector.

Read KPMG’s budget booklet describing the tax proposals in the administration’s FY 2015 budget.

Executive summary of exempt organization-related tax provisions FY 2015 budget

Among the proposed measures in the FY 2015 budget are provisions that would:

  • Require that all Form 990 series tax and information returns be filed electronically and require the IRS to make the electronically filed Form 990 series returns publicly available in a machine readable format in a timely manner

  • Impose a $5,000 penalty for tax-exempt organizations that fail to comply with a requirement to file electronic returns

  • Change the excise tax rate imposed on the net investment income of private foundations from the current 1% or 2% to a single rate of 1.35%

  • Modify reporting of tuition expenses and scholarships on Form 1098-T by requiring institutions of higher learning to report amounts paid and not amounts billed

  • Enhance and make permanent incentives for the donation of conservation easements

  • Limit the tax rate for charitable contributions and interest income earned on certain tax-exempt bonds to 28% in computing the “Fair Share Tax” (under the “Buffett rule”)

  • Expand and simplify the tax credit provided to qualified small employers for non-elective contributions to employee health insurance by expanding the definition to include employers with up to 50 full-time equivalent employees

  • Increase the standard mileage rate for automobile use by volunteers to the same rate used for purposes of the medical and moving expense deduction

Provisions concerning tax-exempt bonds include proposals that would:

  • Create a new, permanent America Fast Forward Bond program that would include as an “eligible use,” financing for section 501(c)(3) nonprofit entities and all qualified private activity bond categories

  • Modify tax-exempt bonds for Indian tribal governments

  • Allow current refunding of state and local governmental bonds

  • Repeal the $150 million non-hospital bond limitation on qualified section 501(c)(3) bonds

  • Allow more flexible research arrangements for purposes of the private business use limits

  • Repeal the government ownership requirement for exempt facility bonds related to airports, docks and wharves, and mass commuting facilities

  • Affect tax-exempt bonds by simplifying the arbitrage investment restrictions and streamlining private business use limits on governmental bonds

For more information, contact:

Rick Speizman, Partner-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group

+1 (202) 533-3084

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For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

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