Tax Update: Repeal of Nonprofit UBI “Parking Tax” Announced January 7, 2020 BACKGROUND At the end of 2017, the Tax Cuts and Jobs Act (TCJA) added Section 512(a)(7) to the Internal Revenue Code, which required not-for-profit organizations to increase their unrelated business taxable income for certain fringe benefit expenses. This became commonly known as the “Parking Tax.” Despite certain guidance passed at the end of 2018, the provision caused concern amongst tax-exempt organizations because of the prospect of increased tax liability, the lack of clarity for determining the taxable amount of such benefits, and the additional administrative burdens triggered for certain organizations. On December 20, 2019, President Trump signed into law government funding legislation for the 2020 fiscal year that includes a provision repealing Section 512(a)(7), the Unrelated Business Income Tax (UBIT) on parking and transportation fringe benefits. The repeal applies to amounts paid or incurred after December 31, 2017. HOW THIS MAY IMPACT YOUR ORGANIZATION Affected organizations may file an amended Form 990-T to claim a refund for any taxes paid related to such qualified transportation fringe benefits. Organizations are encouraged to consult their tax advisors as to whether a state tax refund is available as well. The expectation is that the IRS will publish additional guidance regarding the refund process, and we will be sure to keep you posted. If you or someone in your organization would like additional information concerning this recent repeal, please contact: Lauren Caldwell, CPA Manager KatzAbosch Visit our nonprofit accounting services to learn more. About KatzAbosch: Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As an accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our regional clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and has been named a Top 200 Accounting Firms in the Nation by Inside Public Accounting. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal and a Top Workplace four times by The Baltimore Sun.