PODCAST | Congress Repeals Parking Tax for Nonprofits

Published on: 02/06/2020 By: Gorfine, Schiller & Gardyn

In GSG’s latest podcast, Tom Colegrove, a Manager in GSG’s Tax practice, provides an update on the “parking tax” for nonprofit and for-profit organizations.

Section 512(a)(7), better known as the nonprofit “parking tax,” was enacted as part of the Tax Cuts and Jobs Act (TCJA) and became effective January 1, 2018.

The statute required nonprofits to pay tax on the cost of providing qualified transportation fringe benefits for their employees. This included benefits such as parking and certain other commuter benefits. The tax was administered in the form of unrelated business income tax (UBIT), and the expenses were to be included in income on Form 990-T.

However, this past December, Congress provided relief for nonprofit entities and repealed the tax retroactively, meaning taxpayers who already filed forms and paid tax are due a refund.

Nonprofits looking to receive a refund must file an amended Form 990-T. Specific instructions for completing an amended Form 990-T for this situation have been published by the IRS.

The repeal of the parking tax only affects nonprofit organizations. For-profit entities are still disallowed similar deductions under Section 274.

If you have any questions to the recent changes regarding the parking tax, please contact our tax professionals today.

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