FICA Tip Credit - Nonprofit 990-T

Technical topics regarding tax preparation.
#1
Wiles  
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I have a nonprofit organization that files a 990-T for private party use of their dining room and bar sales. The nonprofit has employees that report tips and the nonprofit pays FICA tax on those tips.

Can we claim the Form 8846 tip tax credit against the 990-T tax?

I know software is not law, but Lacerte will not produce this form on an exempt organization.
 

#2
Noobie  
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Location:
Jacksonville, FL
990t instructions:

"Line 45c. General Business
Credit
Enter on line 45c the organization's total
general business credit (excluding the
work opportunity credit, employee
retention credit, the empowerment zone
employment credit, the Indian
employment credit, and the credit for
employer differential wage payments).
Additionally, in some cases, certain
general business credits should not be
claimed if the seller of the property
discloses to the organization that the seller
intends to claim the credit and discloses
the tentative amount of the credit. These
include the qualified electric vehicle credit,
the alternative motor vehicle credit, the
alternative fuel vehicle refueling property
credit, and the qualified plug-in electric
drive motor vehicle credit.
The organization is required to file
Form 3800, General Business Credit, to
claim any business credit. For a list of
credits, see Form 3800. Include the
allowable credit from Form 3800, Part II,
line 38, on Form 990-T, line 45c.
An organization described in
section 501(c) which is exempt
from tax under section 501(a)
should not use Form 3800 to claim the
refundable small employer tax credit for
certain health insurance premiums paid on
behalf of its employees. See the
instructions for line 50f."


8846 Generally feeds to 3800 which in this case goes on line 45C. After researching the instructions for 8846 and 3800, I see nothing prohibiting a 990T filer from claiming the credits as long as they operate a small business.
 

#3
Noobie  
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Although per instructions for form 3800, Eligible Small business is defined as:
"Eligible Small Business
An eligible small business is:
• A corporation whose stock is not
publicly traded,
• A partnership, or
• A sole proprietorship.
The average annual gross receipts of
the corporation, partnership, or sole
proprietorship for the 3-tax-year period
preceding the tax year of the credit cannot
exceed $50 million. Gross receipts for any
tax year must be reduced by returns and
allowances made during the year. Any
reference to your business also includes a
reference to any predecessor of your
business.
If your business was not in existence
for the entire 3-year period, base your
average annual gross receipts on the
period your business existed. Also, if your
business had a tax year of less than 12
months, your gross receipts must be
annualized by multiplying the gross
receipts for the short period by 12 and
TIP
-2- Instructions for Form 3800 (2018)
Page 3 of 6 Fileid: … ions/I3800/2018/A/XML/Cycle06/source 13:19 - 22-Jan-2019
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
dividing the result by the number of
months in the short period."

Reading that definition, I don't see how the non profit can claim that credit. But the 990T specifically has space for credits from form 3800, so that being said, there is some conflicting implications with those instructions vs. the 990T Form.
 

#4
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#5
Anderly  
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#6
Wiles  
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5053
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Location:
CA
Great info! Better than expected.

Thank you!

(Technical Advice Memorandum 199931041)
 


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