FYI Tax-exempt Organizations

Since the healthcare reform law passed there have been a lot of questions about how the different aspects of the law impact exempt organizations. While we don't have all the answers yet the IRS did just post some guidance on one piece of the new law. The IRS announced the release of a draft version of the Form 8941 that both small businesses and tax-exempt organizations will use to calculate the small business health care tax credit during the 2011 tax season. The credit is desinged to encourage small employers to offer health insurance coverage or maintain the coverage they currently offer their employees.

While small businesses will include the amount of the credit as part of the general business credit on their tax returns, tax-exempt organizations eligible for the refundable credit will claim the credit on a revised Form 990-T. The revised Form 990-T will enable eligible tax-exempt organizations to claim the tax credit even though they owe no tax on unrelated business income. This means that organizations that normally would not file a 990-T will have to do so if they want to claim this credit, while this isn't the best possible solution it is at least a solution.