WASHINGTON — The Internal Revenue Service today issued proposed regulations for the new 1.4 percent excise tax on the net investment income of certain private colleges and universities.

The proposed regulations define several of the terms necessary for educational institutions to determine whether the section 4968 excise tax applies to them. 

The tax applies to any private college or university that has at least 500 full-time tuition-paying students (more than half of whom are located in the U.S.) and that has assets other than those used in its charitable activities worth at least $500,000 per student. An estimated 40 or fewer institutions are affected. 

For affected institutions, the guidance clarifies how to determine net investment income, including how to include the net investment income of related organizations and how to determine an institution’s basis in property.

These proposed regulations incorporate the interim guidance provided in Notice 2018-55, that for property held by an institution at the end of 2017, generally allows the educational institution to use the property’s fair market value at the end of 2017 as its basis for figuring the tax on any resulting gain.

Updates on the implementation of this and other TCJA provisions can be found on the Tax Reform page of IRS.gov.

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IRS cautions taxpayers on scams involving disasters, charitable causes and encourages taxpayers to donate to recognized charities to help disaster victims. #IRS’ annual “Dirty Dozen” also lists a variety of common scams taxpayers may encounter.

Understanding Disaster Relief Tax Law and Contribution Deductibility
The IRS offers two courses – Disaster Relief – Parts 1 and II – for charitable organizations providing disaster relief. Topics include how charities may provide disaster relief, deductibility of contributions and tax treatment of relief recipients. Organizationleadership and volunteers should review the Tax-Exempt Organization Workshop that includes important information on the benefits, limitations and expectations of tax-exempt organizations.

Revisions made to IRS Online Registration System for 501(c)(4) Certification
Organizations required to submit Form 8976, Notice of Intent to Operate Under Section 501(c)(4), will notice a new look and improved navigation at the Online Registration System for 501(c)(4) Certification webpage.

Revenue Procedure 2019-22 
This revenue procedure modifies Revenue Procedure 75-50 to allow a third method for private schools to satisfy the requirement contained in Section 4.03 of the revenue procedure by using its primary publicly accessible Internet homepage to publicize the school’s racially nondiscriminatory policy.

Register for 2019 IRS Nationwide Tax Forums 
The IRS reminds tax professionals to sign up for this summer’s 2019 IRS Nationwide Tax Forums. Tax professionals attending can earn up to 19 continuing education credits.

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If you have a technical or procedural question about Exempt Organizations, visit the Charities and Nonprofits homepage on IRS.gov.

If you have a specific question about exempt organizations, call EO Customer Account Services at 877-829-5500.

Educators may be able to deduct unreimbursed expenses on their tax return. This deduction can put money right back in the pockets of eligible teachers and other educators.

Here are some things to know about this deduction:

• Educators can deduct up to $250 of trade or business expenses that were not reimbursed. As teachers prepare for the next school year, they should remember to keep receipts after making any purchase to support claiming this deduction.
  
  
• The deduction is $500 if both taxpayers are eligible educators and file their return using the status married filing jointly. These taxpayers cannot deduct more than $250 each.
  
  
• Qualified expenses are amounts the taxpayer paid themselves during the tax year.
  • Examples of expenses the educator can deduct include:
  • Professional development course fees
  • Books
  • Supplies
  • Computer equipment, including related software and services
  • Other equipment and materials used in the classroom
    
    
• Taxpayers claim the deduction on Form 1040 or Form 1040NR. The taxpayer should remember to complete and attach Form 1040, Schedule 1 to their return.
  
  
• To be considered an eligible educator, the taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide. They must also work at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

 
More Information:
Topic Number 458: Educator Expense Deduction 
Publication 17, Your Federal Income Tax for Individuals 
Form 1040NR Instructions

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Certain taxpayers might get a letter from the IRS this year. It’s called an IRS Notice CP 2000. It gives detailed information about issues the IRS identified. The IRS sends this notice when information from a third party doesn’t match the information the taxpayer reported on their tax return. The notice also provides steps taxpayers should take to resolve those issues.

Here is some information about these notices to help taxpayers understand why they got one and what to do when it arrives:

• The IRS sends a notice to the taxpayer when a tax return’s information doesn’t match data reported to the IRS by banks and other third parties.
  
  
• This notice isn’t a formal audit notification. It is simply a notice to see if the taxpayer agrees or disagrees with the proposed tax changes.
  
  
• Taxpayers should respond to the Notice CP2000. The taxpayer usually has 30 days from the date printed on the notice to respond.
  
  
• The IRS provides a phone number on each notice. IRS telephone assistors can explain the notice and what taxpayers need to do to resolve any issues.
  
  
• The IRS will send another notice to the taxpayer if the taxpayer doesn’t respond to the initial Notice CP2000, or if the agency can’t accept the additional information provided. It is called an IRS Notice CP3219A, Statutory Notice of Deficiency.
  
  
• The Notice CP3219A gives detailed information about why the IRS proposes a tax change and how the agency determined the change. The notice tells taxpayers about their right to challenge the decision in Tax Court if they choose to do so. Even if they decide not to go to Tax Court, the IRS will continue to work with the taxpayer to help resolve the issue.

More information:

• Understanding Your CP2000 Notice
• Taxpayer Bill of Rights

YouTube Videos:

• CP2000: Proposed Changes to Your Tax Return
• CP3219A: Statutory Notice of Deficiency

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Taxpayers who haven’t done a Paycheck Checkup to check their withholding in 2019 should do one as soon as possible. The best and easiest way to do a checkup is to use the Withholding Calculator on IRS.gov. However, some taxpayers may need to use Publication 505 to check their withholding.

Here are some things taxpayers should know about these two methods for checking withholding:

Withholding Calculator

• The Withholding Calculator works for most employees by helping them determine whether they need to give their employer a new Form W-4.
• Taxpayers can use their results from the calculator to help fill out the form and adjust their income tax withholding.
• If a taxpayer receives pension income, they can use the results from the calculator to complete a Form W-4P, Withholding Certificate for Pension and Annuity Payments, and give it to their payer.
• Taxpayers who don’t pay taxes through withholding, or don’t pay enough tax that way, may still use the Withholding Calculator to determine if they have to pay estimated tax quarterly during the year to the IRS. Those who are self-employed generally pay tax this way.

Instructions in Publication 505, Tax Withholding and Estimated Tax

• Taxpayers with more complex situations may need to use the instructions in Publication 505, Tax Withholding and Estimated Tax instead of the Withholding Calculator.
• This includes employees who owe self-employment tax, the alternative minimum tax, or tax on unearned income by dependents.
  • Publication 505 can also help those who receive non-wage income such as dividends, capital gains, rents and royalties. 
  • The publication includes worksheets and examples to guide taxpayers through these special situations.

More information:
Pay as You Go, So You Won’t Owe
Estimated Taxes
Form W-4S, Request for Federal Income Tax Withholding from Sick Pay
Form W-4V, Voluntary Withholding Request

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