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December 23, 2019

Unpopular Parking Tax on Not-for-Profits May Be Repealed

Many not-for-profits organizations have been concerned about the taxability of parking and transportation benefits as a result of the Tax Cuts and Jobs Act. Fortunately, Congress recently moved to repeal the dreaded “parking tax” on fringe benefits, such as free parking, offered by tax-exempt organizations.

What is the Parking Tax?

The “parking tax” refers to section 512 (a)(7) of the tax code that requires tax-exempt organizations, including churches, to include the amounts they pay or incur on transportation fringe benefits in unrelated business taxable income. This tax applied to many situations, including if not-for-profits paid a third-party for employee parking spots or if they owned or leased all or a portion of a parking facility.

Repealing the Parking Tax

The bill to repeal the tax has been passed by the House and Senate and is awaiting action by the president. If enacted, the repeal would be made retroactive so that affected organizations that actually paid the tax would be entitled to a refund. Organizations that were required to pay but didn’t would be relieved of the responsibility.

Contact an Anders advisor to discuss how this repeal will impact your organization.

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