In the 2017 Tax Cuts and Jobs Act, a new tax was created for not-for-profit entities on parking expense incurred for the benefit of employees, and other transportation fringe benefits. This law turned parking expense into income and required it to be reported as unrelated business income subject to a 21% tax on the Form 990-T. This law has been in effect for two years.
On December 20th, the President signed into law the Further Consolidated Appropriations Act, 2020, a government spending and tax package bill that included, among its many provisions, a repeal of the unrelated business income tax on qualified transportation fringe benefits (primarily employee parking) retroactive to the effective date of the law (which was January 1, 2018). This is a victory for the not-for-profit community and will minimize not only the tax burden, but also the burden of filing a Form 990-T for many organizations.
If you are a current client, HoganTaylor is diligently working through previously filed returns to determine if there is a benefit to amending the tax return. The amended return could result in either a refund request or a reinstatement of a net operating loss.
Please don’t hesitate to reach out to your HoganTaylor nonprofit tax team if you have any questions or concerns.