Repeal of Tax on Certain Transportation Fringe Benefits
Before 2019 came to a close, President Trump signed legislation to repeal the unrelated business income tax on certain employee transportation fringe benefits.
Originally created by the Tax Cuts and Jobs Act of 2017, the unrelated business income tax on certain employee transportation fringe benefits of tax-exempt organizations was not well received by the non-profit community, as many found themselves owing taxes and dealing with administrative burdens. These benefits included employer-provided parking, parking passes, transit passes, bus or rail passes, van pools, and similar reimbursements to cover an employee’s normal commuting expenses.
With the passing of the new provision comes the repeal of the related “parking tax” content in the Internal Revenue Code, which is effective for expenses incurred after Dec. 31, 2017, effectively reversing the entire practice of creating taxable income to non-profit organizations on their qualified transportation and parking fringe benefits.
This means if your non-profit is required to file a Form 990-T, you will no longer be required to report transportation and parking benefits. Additionally, the retroactive nature of the provision provides the opportunity for 2018 Form 990-Ts affected by these taxed expenses to be amended until 2021. If these tax expenses affected your organization’s filing, contact Doeren Mayhew’s tax advisors to assist in amending your return.