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Not-for-Profits Can Sleep – And Park – a Little Easier

Aerial view of a non-descript building with a parking lot in front of it.

The Taxpayer Certainty and Disaster Tax Relief Act of 2019 was signed into law on December 20, 2019. The new Act not only provides relief for taxpayers affected by disasters but also retroactively lays to rest the very complicated and unfavorable not-for-profit “parking tax” created by the Tax Cuts and Job Act of 2017. That law changed the tax treatment of employee transportation fringe benefits, and as a result of that change many not-for-profits suddenly found themselves having to pay tax on the value of parking and mass transit benefits provided to their employees.

The repeal of this confusing tax law is a victory for not-for-profit organizations. The new law brought a wonderful holiday gift to organizations that had previously paid the tax, as the repeal is retroactive, so it is as if the law never existed. This means any not-for-profit organization that paid the “parking tax” may file for a refund of the previously paid tax.

On January 21, 2020 the IRS issued guidance confirming that tax exempt organizations who paid the “parking tax” on either their 2017 or 2018 Forms 990T should file amended Forms 990T to receive a refund and should write “Amended Return – Section 512(a)(7) Repeal” at the top of the form.  This was the anticipated approach the IRS would take, although some had hoped the IRS would create a special form in order to expedite the refund process. Either way, this retroactive repeal is very beneficial to those organizations that had been previously affected by the ”parking tax” and we are happy to assist our clients in procuring their refunds.

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