ASAE Needs Your Help on Tax Issues

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11/14/2017

ASAE Needs Your Help on Tax Issues

There may be a Senate royalties amendment that would hurt non-profits

As the American Society of Association Executives (ASAE) indicated to its members over the weekend, the Tax Cuts and Jobs Act introduced in the Senate Finance Committee contains a number of provisions that impact tax-exempt organizations that are not currently in the House version.

ASAE and others are working on several of those issues, including provisions that would eliminate deferred compensation plans offered by tax-exempt employers and potentially impose taxes on nonprofit groups that exercise due diligence in setting compensation for top executives.

However, another important issue in the Senate bill would change the tax treatment of royalty income derived from the licensing of a nonprofit's name or logo. ASAE has been making the case to congressional tax-writers that royalties are passive income, meaning the organization has entered into a licensing arrangement for use of its name or logo but is not actively involved in the marketing or administration of the product or service connected with the arrangement. ASAE is working to eliminate this provision from the Senate bill or at the very least modify the provision so that royalties aren't subject to UBIT unless they comprise a substantial portion of an organization's gross income.

ASAE is currently looking for a Republican senator to sponsor an amendment that addresses our concerns related to royalty income. If you have a relationship with any Republican senator serving on the Senate Finance Committee whom you can approach on this issue, please contact ASAE's Public Policy team at (202) 626-2703 or via email at publicpolicy@asaecenter.org. The Senate Finance markup of the tax bill continues today, and the Joint Committee on Taxation is scoring the revised chairman's mark today. Action must be taken now if we want to impact this provision addressing royalties in the Senate bill.

ASAE is especially looking at the Senate Finance Committee members below who have place holder amendments for the markup. If you have any contacts in these offices, we encourage you to share this language with them.