On December 20, 2019, President Donald Trump signed into law a tax package/funding bill which retroactively repeals the transportation fringe benefit tax that was enacted in the Tax Cuts and Jobs Act (TCJA). The “Parking Tax” was an incredible burden on the tax-exempt sector and caused many organizations to pay tax on this benefit it had provided to their employees. This new tax law repeals the added code IRC Section 512(a)(7) retroactively to the enactment date.
If your organization filed a 990T under this provision and paid tax, you should consider how to obtain a refund and cease any further estimated tax payments that you may have scheduled for this provision. If you offset the parking benefit amount with Net Operating Losses, you should consider how this will impact your filing situation moving forward.
Another changed made in the tax package is the tax rate that is paid by a Private Foundation. In the past, a non-operating private foundation paid a 1% or a 2% tax rate. The new tax law modifies that tax rate to be a flat 1.39% rate. This will be effective for tax years beginning after December 20, 2019.
If you have questions about this law or wish to know how your organization may be affected, have a member of our Non-profit team contact you at no charge here, or by calling 513-241-8313.