As part of a bipartisan year-end spending and tax package agreed to this week, Congress repealed IRC Section 512(a)(7) that required tax-exempt organizations to pay a 21% unrelated business income tax (UBIT) on qualified transportation benefits provided to employees (the “Parking Tax”).
President Trump is expected to sign this legislation today to avoid a partial government shutdown at midnight December 20. Once signed, the repeal of the “Parking Tax” is retroactive to the original date of enactment. Taxpayers should be able to file amended Form 990-T to claim a refund for any UBIT paid related to providing qualified transportation benefits to their employees after December 31, 2017.
The legislation also amends IRC Section 4940 private foundation excise tax on net investment income to a single rate of 1.39%. The 1% or 2% tax rates have been eliminated. This single rate rate of 1.39% will be effective for tax years beginning after the legislation’s date of enactment. The new rate is effective for tax years beginning after December 20, 2019.
For additional details, refer to the law (H.R. 1865, Division Q, AKA the Taxpayer Certainty and Disaster Tax Relief Act of 2019, SECs. 207 and 302) or visit irs.gov/charities-and-nonprofits.
As always, let us know if you have any questions.