On December 20, 2019, Congress repealed Section 512(a)(7), commonly referred to as the “parking tax”, imposed on fringe benefits of non-profit organizations pursuant to the 2017 Tax Act.  The provision required tax-exempt employers to increase their unrelated business taxable income (“UBTI”) by amounts paid for qualified transportation fringe benefits provided to employees, including the provision of parking and public transportation benefits. 

For many exempt organizations, the prospect of increased tax liability, having to accumulate additional information and incur additional accounting fees, became a hardship.

The new legislation now reverses the tax burden on exempt organizations and takes away the additional reporting requirements on religious and other exempt organizations that never had to pay taxes in the past. Organizations will be allowed to file amended returns to request refunds for taxes paid in 2017 and 2018 on Form 990-T.  If your exempt organizations paid taxes on these transportation fringe benefits and you need assistance filing for a refund, please contact us.

Article contributed by Viktoryia Olunina, CPA.