Not-for-profits receive a welcome year-end gift: A repeal of the parking lot tax
January 7, 2020 | Faye Hayhurst, CPA
Since the end of 2017, a hot topic of conversation for not-for-profit leaders and the CPAs who serve them has revolved around a particular provision within the Tax Cuts and Jobs Act (TCJA): the taxability of transportation benefits provided by not-for-profit organizations (NFPs) for their employees. Almost every NFP was required to assess whether they were required to report unrelated business income (UBI) for the benefits provided and, if so, pay the accompanying UBI tax. Although the value of employer-provided parking was only one element of possible UBI, this particular tax was disdainfully referred to as the "parking lot tax.”
Conversations about this calculation have included grumblings (if not more profane dismay), head-scratching and abundant confusion, not to mention the unhappiness with paying a tax related to an expense rather than revenue. The number of hours and dollars spent by employees and advisory professionals in determining whether the NFP had UBI related to transportation benefits remains unknown.
What is known is as of Dec. 20, 2019, the pain has ended. With the signing of the Taxpayer Certainty and Disaster Relief Act of 2019, this tax is now repealed.
The best news is that the repeal is retroactive -- as if the tax were never enacted. The organizations that determined they owed no tax but, in the absence of clear guidance on how to do the calculation, were not confident in their conclusion, can now breathe a sigh of relief. The organizations that paid the tax for 2018 and/or 2019 will be able to seek a refund. Please refer to the IRS' guidance on how to claim a refund or credit
if this scenario applies to your organization.
This tax may have been one of the most unusual and notorious ever passed by Congress. The good news is that the efforts of many organizations -- including advocacy groups like the AICPA -- succeeded in petitioning for its end.
Being able to forget that the parking lot tax ever existed is indeed a happy start to a new year!
Topics: Regulation, Not-for-Profit, Taxation-Business
Faye Hayhurst, CPA
Faye Hayhurst is the MNCPA director of finance and administration. She is committed to using numbers to tell relevant stories, although she also employs words, charts and occasionally clothing to communicate a message. While some have questioned her about the pressures of being the CPA for the MNCPA, Faye considers presenting financial information to fellow CPAs a dream job. Outside of storytelling with numbers, Faye enjoys directing her church's handbell choir, visiting national parks and other scenic places, and checking out the chocolate products at Trader Joe's. Faye can be reached at 952-885-5540 or firstname.lastname@example.org.
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