New Law, H.R. 1865, Gives Nonprofit Organizations Relief from 2017 Enacted Parking Tax

In 2017 with the many sweeping changes of the Tax Cuts and Job Act (TCJA), nonprofit organizations found themselves circling the lot trying to understand one of the more perplexing laws involving tax on employee provided parking.

The act made employee provided parking a taxable “qualified transportation fringe benefit” (QTF). It impacted many exempt organizations and required all nonprofits to compute whether they were impacted and required to file a 990-T, often resulting in higher taxes owed.

As of December 20, 2019, the parking tax law has been repealed and nonprofits are no longer subject to Sec 512(a)(7). This legislation taxed as unrelated business taxable income any amounts paid for qualified transportation fringe benefits, including expenses related to parking facilities used in connection with qualified parking.

This repeal is retroactive, meaning nonprofits who have filed returns and payed those taxes can amend those returns and are entitled to a refund. This repeal is due in large part to the efforts and strength of the nonprofit community who have been advocating for changes since the law went into effect. Thank you to those who worked tirelessly to make your voices heard!

Next steps: If you were subject to this tax, work with your accountant to ensure the appropriate returns are amended. We are expecting the IRS to issue guidance on the process for obtaining refunds soon.  If you were previously not subject to this tax, no further action is required on your part.

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