On Dec. 19, the Senate parliamentarian ruled that three provisions in the Tax Cuts and Jobs Act violated Senate procedure. These provisions, which were subsequently removed, related to the use of 529 savings accounts for home-schooling expenses, the short title “The Tax Cuts and Jobs Act,” and the criteria for imposing a new excise tax on endowments of private colleges and universities. The Senate revised the bill and approved it early this morning, and the House approved the revised bill, which was sent to President Trump for signature.
Broadening Recipients for 529 Accounts
The revised bill continues to allow payments of up to $10,000 per student per year from 529 college savings plans for tuition at public, private, or religious elementary and secondary schools, but it no longer allows such funds to pay expenses of home-schooling.
Colleges and Universities
The revised bill continues to impose a 1.4 percent excise tax on the endowments of private colleges and universities that have at least 500 students (more than 50 percent within the United States) and have investment assets valued at $500,000 or more per full-time student.
The revised bill counts all students, not just “tuition-paying” students, in determining whether the tax applies to a particular institution. As in prior versions of the bill, investments of any organization related to the college or university, including supporting organizations, would count toward the asset threshold. The tax would not apply to public colleges and universities.
McGuireWoods’ Nonprofit and Tax-Exempt Organizations Group
McGuireWoods’ nonprofit and tax-exempt organizations group
provides advice and guidance that enable charities and other nonprofits to
operate more efficiently and effectively in today’s increasingly
complicated, regulated and competitive environment.
represent public and private colleges and universities. This representation
includes statutory and regulatory compliance and investigation work
relating to the Higher Education Act of 1965 and federal student aid
programs. It also includes issues relating to NCAA investigations, faculty
tenure, financing expansion, low-income housing, 501(c)(3) and other tax
issues, student lending compliance and investigations, intellectual
property, students and academics, housing, governance, endowment
management, and construction.
Private Wealth Services
McGuireWoods’ private wealth services team
stands ready to help clients and their advisors obtain estate planning
results that benefit themselves and their families from tax and non-tax
perspectives. The team has been ranked by Chambers, the
international rating service for attorneys, as one of the top wealth
management legal practices in the country for several years. Our
professionals throughout the United States and in London are dedicated to
estate planning and the analysis of related tax and fiduciary issues. Click
for a full list of team lawyers and their locations.