Good News for Nonprofits Paying UBI on Employee Transportation and Parking Benefits

One of the more confusing provisions of the 2017 Tax Cuts and Jobs Act related to employer provided parking and transportation fringe benefits, particularly as it applied to nonprofit organizations. The expenses that nonprofit organizations incurred to provide parking to their employees was treated as unrelated business income. Guidance on how to determine these expenses was minimal and unclear. 

The good news is that Internal Revenue Code Section 512(a)(7) was repealed in late December, retroactively to its inception.  Nonprofit organizations that paid taxes under this provision will be entitled to refunds. Amended returns must be filed to receive the refunds from returns already filed. A 990-T will need to be filed to claim refunds for estimated taxes paid in anticipation of taxes due. 

For additional information, please contact Tax Director Adrienne McKinney

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