Client Alert: Tax Reform Act of 2014: Potential Impact on Tax-Exempt Organizations

Many of the provisions in the proposed Tax Reform Act of 2014 (“TRA 2014”) released earlier this year would adversely impact tax-exempt organizations.  For example, TRA 2014 would remove the long-time exclusion from unrelated trade or business income for royalty income from any sale or licensing by a tax-exempt organization of its name or logo, treat a sponsor’s payment as unrelated trade or business income if the tax-exempt organization uses or acknowledges the sponsor’s product lines, increase and create new penalties regarding return preparation, expand the reach of intermediate sanctions and self-dealing, repeal Type II and Type III supporting organizations, and impose a 2% adjusted gross income floor and other limitations on deductible charitable contributions.