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Washington - New Tax Code Makes Synagogues Pay For Employees’ Benefits. Jewish Groups Are Balking

Published on: August 9, 2018 06:00 PM
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Washington - An Orthodox Jewish organization called on Treasury Secretary Steven Mnuchin to delay implementing a tax code provision that requires synagogues and nonprofits to pay federal taxes on employee benefits.

The provision added to the tax code in December’s Tax Cut and Jobs Act would require houses of worship and other nonprofits for the first time to pay federal taxes on employee fringe benefits such as parking and transportation subsidies.

A bill called the Lessening Impediments from Taxes for Charities Act would repeal the provision. Rep. Mark Walker, R-N.C., introduced the measure in the U.S. House of Representatives in July and Sen. James Lankford, R-Okla., followed suit earlier this month in the Senate.

The Orthodox Union in a letter sent Thursday to Mnuchin expressed its “concern and opposition to the widespread, overly burdensome, and intrusive impact” that the tax code provision would have on the organization, its constituent synagogues and parochial schools, and on other nonprofit and religious organizations.

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The O.U. said the cost of preparing and filing the tax return could exceed the actual tax. It asked Mnuchin to delay implementation and enforcement of the regulations until legislation removing the requirement from religious and nonprofit groups is considered by Congress.

“This unprecedented change in the tax law is a significant and worrisome change,” the O.U. letter said. “Houses of worship have long been exempted from taxation to uphold the separation of church and state embodied by the Establishment Clause of the First Amendment of the United States Constitution.”

In a letter Thursday to Jewish federation officials throughout the United States, William Daroff, senior vice president for public policy and director of the Washington office of the Jewish Federations of North America, called on his colleagues to contact their members of Congress and urge them to pass the corrective legislation repealing the “unfair tax on charities that provide qualified transportation fringe benefits to their employees.”



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Read Comments (7)  —  Post Yours »

1

 Aug 09, 2018 at 06:32 PM Anonymous Says:

The headline to this article is #fakenews. It makes it seem like Shuls suddenly are refusing to pay benefits.

That is not at all what is happeneing. What has happened is that ALL not for profits are required to report as unrelated business income, which is subject to tax at the corporate rate, the amount of salaries that employees have set aside for transportation benefits that are excluded from employees reportable salaries.

This is a huge issue for ALL not for profits in metropolitan areas where these benefits are usually provided. It is not just Shuls. In fact a sane person would tell you that it does not impact any of the small Shuls that just have a single employee.

It is criminal that the authors of this farticle want to make it seem that shteiblech are trying to fleece employees out of benefits. Feh on the authors and feh on VIN for its disgusting headline.

1

 Aug 09, 2018 at 06:36 PM Secular Says:

Since when do Shulls pay taxes

2

 Aug 10, 2018 at 09:58 AM rescue Says:

It's not fake news but it is definitely very old news. As a controller in a non-profit, this has been known since the tax bill was passed and there are some large non-profit associations working on this since then. What is fakenews is the OU saying that the return will cost more than the tax. If that is true, than the OU needs new auditors/accountants because they are being ripped off. The tax itself is approximately $78 per person who would max out their transit pre-tax deduction. As the OU is in NYC, at a minimum it's employees in NYC are required to have this benefit. I don't know how many employees they have, but the return 990-T shouldn't cost more than $1,000-$1,500 and very likely even less. The high end is 20 employees maxing out, and I would guess they have more than 20 employees taking the benefit.

3

 Aug 10, 2018 at 11:32 AM georgeg Says:

Reply to #2  
rescue Says:

It's not fake news but it is definitely very old news. As a controller in a non-profit, this has been known since the tax bill was passed and there are some large non-profit associations working on this since then. What is fakenews is the OU saying that the return will cost more than the tax. If that is true, than the OU needs new auditors/accountants because they are being ripped off. The tax itself is approximately $78 per person who would max out their transit pre-tax deduction. As the OU is in NYC, at a minimum it's employees in NYC are required to have this benefit. I don't know how many employees they have, but the return 990-T shouldn't cost more than $1,000-$1,500 and very likely even less. The high end is 20 employees maxing out, and I would guess they have more than 20 employees taking the benefit.

poster #2 - the OU was not speaking just about its own employees. The OU is an umbrella that speaks for an arbitrary number of member organizations across the whole country - and each member organization would be paying separately for its own tax return, which in aggregate (summed across all members) would be a lot of money. And indeed, if many of these member organization have something like 2 or 3 employees who receive the benefit (as not every employee may be receiving the benefit), the aggregate cost might just exceed the aggregate tax.

4

 Aug 10, 2018 at 11:53 AM Anonymous Says:

Reply to #2  
rescue Says:

It's not fake news but it is definitely very old news. As a controller in a non-profit, this has been known since the tax bill was passed and there are some large non-profit associations working on this since then. What is fakenews is the OU saying that the return will cost more than the tax. If that is true, than the OU needs new auditors/accountants because they are being ripped off. The tax itself is approximately $78 per person who would max out their transit pre-tax deduction. As the OU is in NYC, at a minimum it's employees in NYC are required to have this benefit. I don't know how many employees they have, but the return 990-T shouldn't cost more than $1,000-$1,500 and very likely even less. The high end is 20 employees maxing out, and I would guess they have more than 20 employees taking the benefit.

What is most certainly fake news is the published headline.

This has nothing to do with making Shuls pay for a benefit. This is a new tax (first appliance this year) to be paid by Not for Profits if they provide the benefit for the employees. It will now cost them more for the UBIT than what the agency will save on not being subject to FICA on that portion of the employees salary.

5

 Aug 10, 2018 at 01:07 PM rescue Says:

Reply to #4  
Anonymous Says:

What is most certainly fake news is the published headline.

This has nothing to do with making Shuls pay for a benefit. This is a new tax (first appliance this year) to be paid by Not for Profits if they provide the benefit for the employees. It will now cost them more for the UBIT than what the agency will save on not being subject to FICA on that portion of the employees salary.

agreed. My issue is the apparent hysterics that are being reported (not only here, but in other reports also). This has been known for 8 months and several large organizations have been working on this. Why is everyone hysterical now? The first estimated payment for this was due June 15th.

6

 Aug 12, 2018 at 08:41 PM Anonymous Says:

Why were there two #1s?

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