Is this an early holiday gift for nonprofits?

Congress has passed the repeal of the nonprofit parking tax with the latest government spending bill.  In December 2017 Congress passed the Tax Cut & Jobs Act (TCJA) which included many tax law changes including making qualified transportation fringe benefits, which include the cost of transportation in a commuter highway vehicle, any transit pass, and qualified parking, nondeductible for businesses.  Since these items are no longer deductible for a for-profit businesses, they became subject to unrelated business taxable income (UBTI) for the nonprofit community.  In December 2018 the IRS released Notice 2018-99 to provide guidance for nonprofits to determine the corresponding increase in the amount of unrelated business taxable income.  The nonprofit parking tax was extremely unpopular with the nonprofit community.  Many citing that it was illogical and unfair to increase taxes for nonprofits because of an expense.

Congress has passed a $1.4 Trillion spending bill to avoid a government shutdown.  The spending bill includes the repeal of Section 512(a)(7) that imposed the tax on nonprofits for providing qualified transportation fringe benefits.  The repeal of the parking tax is retroactive back to 2017.  Any nonprofit that many have paid tax on the transportation fringe benefits should file an amended 990T to claim a refund of the taxes paid.

Contact PBMares if you have any questions about the repeal of the nonprofit parking tax.

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