Congress has moved to repeal the unpopular “parking tax” imposed on fringe benefits like free parking provided by tax exempt organizations in the 2017 Tax Act. (See Ready Reference Page: “Tax Bill Not Good for Nonprofits”)
The unrelated business income tax was imposed on a variety of fringe benefits such as free parking, subsidized transit passes, and use of on-premises athletic facilities. The taxes were immediately unpopular, in part because they applied to churches that generally file no tax returns. The tax bill was passed without a single public hearing and nonprofits had little opportunity to seek to stop the measure.
According to the National Council of Nonprofits, which has continually pushed for repeal, the repeal was included in the House bill to fund the government for the next year. The repeal would be made retroactive so that exempt organizations that actually paid the tax would be entitled to a refund, and those that should have paid but didn’t would be relieved of the responsibility.
The Senate has passed the House bill and sent it to the President for signature to prevent a government shut-down after December 20.
The Bill also sets the excise tax on net investment income for private foundations at 1.39%, instead of the current base tax of 2% that can be reduced to 1% through additional grantmaking. The foundation community has been seeking simplicity and lower cost for many years.