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Latest on the TCJA and Qualified Transportation Fringe (QTF) Expenses Inbox

Monday, June 22, 2020   (0 Comments)
Posted by: Sabrina Hidalgo
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RCRI members may recall the Tax Cuts and Jobs Act (TCJA) of 2017 does not allow deductions for qualified transportation fringe (QTF) expenses and does not allow deductions for certain expenses of transportation (such as parking) and commuting between an employee’s residence and place of employment.

 

At the same time, the TCJA originally provided that the unrelated business taxable income of a tax-exempt organization, such as a religious institute, was increased by the amount of the QTF expense that is nondeductible. However, on December 20, 2019, this provision was repealed as part of the Further Consolidated Appropriations Act of 2020. This repeal was retroactive to the original date of enactment by the TCJA, that is, January 1, 2018, as if the tax was never in the original TCJA.

 

On Friday, June 19, 2020, the Internal Revenue Service issued proposed regulations that provide guidance for the deduction of the qualified transportation fringe and commuting expenses. These proposed regulations specifically address the elimination of the deduction for expenses related to QTFs provided to an employee of the taxpayer. The proposed regulations also provide guidance and methodologies to determine the amount of QTF parking expense that is nondeductible.

 

The guidance also includes definitions and special rules to clarify and simplify the calculations underlying the methodologies. For more information about this and other TCJA provisions, visit IRS.gov/taxreform.

 

See also RCRI’s News In Brief from Spring 2020 on page 4 for additional information: Click Here


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