Association Asks IRS to Further Extend July 15 Tax Deadline

June 25, 2020

Krishna Vallabhaneni, Tax Legislative Counsel
Department of the Treasury
1500 Pennsylvania Avenue, N
Washington, DC 20220

Re: Extension of Tax Delay — Tax on Excess Tax-Exempt Organization Executive Compensation

Dear Mr. Vallabhaneni:

Thank you for the time-sensitive decision by the IRS and Treasury to postpone taxes until July 15 due to the current global pandemic. I write today to ask for the IRS and Treasury to further extend the deadline beyond the current July 15 date.

The nonprofit association and broader tax-exempt communities are extremely grateful the Administration and Congress have taken swift action to help businesses, nonprofits and millions of Americans withstand the coronavirus pandemic, which jeopardizes our collective livelihood, welfare and safety. Nonprofit associations around the country face dire financial circumstances due to lost revenue from cancelled meetings and a downturn in membership. Delayed filing for Section 4960, among other taxes, is essential to mitigate the coronavirus pandemic's harmful impact on our sector.

Because of an oversight, as we understand, employment contracts in place prior to the 2017 tax reform are subject to the new IRC Section 4960 excise tax. In practical terms, this means that nonprofit associations and other tax-exempt organizations have no recourse but to deplete reserve funds to meet their Section 4960 tax obligation — often in the hundreds of thousands of dollars or more. This is to say nothing of the health, safety and economic emergency we now face. For countless organizations, coronavirus response measures have overtaken reserves, and the executive compensation tax could prove devastating. Further, IRC Section 501(c)(6) trade and professional organizations are ineligible for the Paycheck Protection Program in the CARES Act, thereby prohibiting access to a critically needed safety net.

Thank you for your consideration of this important matter. If you have any questions, please contact Mary Kate Cunningham, Vice President of Public Policy, at mcunningham@asaecenter.org or at 202.626.2787.

Sincerely,

Susan Robertson, CAE
President and CEO
ASAE
Washington, DC