A number of important tax changes go into effect in 2019. Some were ushered in by legislation such as the Tax Cuts and
Jobs Act (TCJA; P.L. 115-97, the 2016 Consolidated Appropriations Act (2016 Appropriations Act, P.L. 114-113), and the
Bipartisan Budget Act of 2018 (BBA; P.L. 115-123). Still other changes are the result of various administrative
pronouncements by IRS. This article, covering changes for businesses and tax-exempt organizations (other than indexing
Health Insurance Provider Fee Suspended for 2019: Under the Affordable Care Act (ACA, or Obamacare), for calendar
years beginning after Dec. 31, 2013, covered entities engaged in the business of providing health insurance with respect
to U.S. health risks face an annual flat fee. The fee is a fixed amount allocated among all covered entities in proportion to
their relative market share as determined by each entity’s net premiums written for the data year, which is the year
immediately preceding the year in which the fee is paid. (ACA Sec. 9010) The 2016 Appropriations Act revised the
effective date of the annual fee so that it applied to calendar years: (i) beginning after Dec. 31, 2013 and ending before
Jan. 1, 2017; and (ii) beginning after Dec. 31, 2017. (ACA Sec. 9010 (j), as amended)
Accounting Method Changes Rules for the AFS Conformity Rule: Under the TCJA, generally for tax years beginning after Dec.
31, 2017, a taxpayer must recognize income no later than the tax year in which such income is taken into account as
income on an applicable financial statement (AFS) or another financial statement under rules specified by IRS (subject to
an exception for long-term contract income under Code Sec. 460 ). However, under a special effective date provision, the
AFS conformity rule applies for OID for tax years beginning after Dec. 31, 2018, and the adjustment period is six years.
Observation: The six-year period is an exception to the general rules that require Code Sec. 481(a) adjustments to
be taken into account in the year of change if they reduce taxable income (“negative adjustments”) and over a four year
period beginning with the year of change if they decrease taxable income (“positive adjustments”).
Many Tax-Exempt Organizations Freed from Donor Disclosure Requirement: Code Sec. 6033(a) requires certain tax-exempt
organizations to file annual information returns that include information required by forms or regs. The annual information
returns required under Code Sec. 6033 include Forms 990, “Return of Organization Exempt From Income Tax”; 990-EZ,
“Short Form Return of Organization Exempt From Income Tax”; 990-PF, “Return of Private Foundation”; and 990-BL,
“Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons.” Code Sec. 6033(b)
provides that tax-exempt organizations described in Code Sec. 501(c)(3) that are subject to the requirements of Code Sec.
6033(a) must furnish information annually setting forth certain items including, “the total of the contributions and gifts
received by it during the year, and the names and addresses of all substantial contributors.”
Although the statute does not address contributor reporting by tax-exempt organizations other than those described in
Code Sec. 501(c)(3), the implementing regs under Code Sec. 6033(a) generally require all types of tax-exempt
organizations to report the names and addresses of all persons who contribute $5,000 or more in a year. (Reg. §
1.6033-2(a)(2)(ii)(f)) Reg. § 1.6033-2(a)(2)(iii)(d) also requires organizations described in Code Sec. 501(c)(7) (generally,
social clubs), Code Sec. 501(c)(8) (generally, fraternal beneficiary societies), or Code Sec. 501(c)(10) (generally, domestic
fraternal societies) to report the name of each person who contributed more than $1,000 during the tax year to be used
exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or
The names and addresses of contributors for all types of organizations were reported on Schedule B, “Schedule of
Contributors,” filed with Forms 990, 990-EZ, and 990-PF, or, with respect to organizations described in Code Sec.
501(c)(21), in Part IV of Form 990-BL.
Code Sec. 6033(a)(3)(B) provides a discretionary exception from the annual filing requirement under which IRS may
relieve any organization (other than a supporting organization described in Code Sec. 509(a)(3)) otherwise required to file
an information return from filing such a return if IRS determines that the filing is not necessary to the efficient
administration of the internal revenue laws.
For information returns for tax years ending on or after Dec. 31, 2018, tax-exempt organizations required to file Form 990
or Form 990-EZ, other than those described in Code Sec. 501(c)(3), will no longer be required to provide names and
addresses of contributors on their Forms 990 or Forms 990-EZ and thus will not be required to complete these portions of
their Schedules B (or complete the similar portions of Part IV of the Form 990-BL). Similarly, organizations described in
Code Sec. 501(c)(7), Code Sec. 501(c)(8), or Code Sec. 501(c)(10) will no longer be required to provide on Forms 990 or
Forms 990-EZ the names and addresses of persons who contributed more than $1,000 during the tax year to be used for
exclusively charitable purposes. (Rev Proc 2018-38, 2018-31 IRB)
The above changes don’t affect:
. . . the information required to be reported on Forms 990, 990-EZ, or 990-PF by organizations described in Code Sec.
501(c)(3) (which, for purposes of Code Sec. 6033, include nonexempt charitable trusts described in Code Sec.
4947(a)(1) and nonexempt private foundations described in Code Sec. 6033(d)) or political organizations described in
Code Sec. 527.
. . . the reporting of contribution information, other than the names and addresses of contributors, required to be
reported on Schedule B of Forms 990 and 990-EZ and Part IV of the Form 990-BL.
. . . the disclosure requirements under Code Sec. 6104(b) or Code Sec. 6104(d) of any information reported on the
Schedule B of Forms 990 and 990-EZ and Part IV of the Form 990-BL. As a result, the Revenue Procedure will have
no effect on the reporting of Schedule B information that is currently open to public inspection.
And, organizations relieved of the obligation to report contributors’ names and addresses must continue to keep this
information in their books and records in order to permit IRS to efficiently administer the internal revenue laws through
examinations of specific taxpayers.
-Courtesy of Thomson Reuters, January 4, 2019