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Parking Lot Tax Repealed

Wednesday, January 8, 2020   (0 Comments)
Posted by: Sabrina Hidalgo
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On December 20, 2019, President Donald Trump signed into law two spending packages – worth a combined $1.4 trillion – that Congress had adopted earlier that week.


As RCRI members are aware, an original provision, found in the December 2017 Tax Cuts and Jobs Act (TCJA), was an unrelated business income tax (UBIT) on qualified transportation fringe benefits, including employer-provided parking, provided by nonprofits, churches and religious institutes.


Criticism from across the nonprofit sector, including the USCCB, was expressed regarding this “parking lot tax” provision after the passage of the TCJA which provided this UBIT. The passage of the December 20, 2019 spending packages now does away with this “parking lot tax” provision.


Further, the repeal operates retroactively, as if the tax was never in the original law. Nonprofits, churches and religious institutes that filed returns paying the tax may amend those returns to obtain refunds. It is expected the Internal Revenue Service (IRS) will issue guidance on the refund process. It is hoped that the IRS might automatically generate refunds for organizations that filed income tax returns solely to pay this nonprofit “parking lot tax” without the need to file an amended return.


In 2019, the IRS issued guidance regarding how the tax was supposed to work, but at least a portion still would have been based on a four-step analysis derived from the IRS’s explanation.


Further information will be shared with RCRI members regarding this retroactivity once it is received from the IRS.


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