When the IRS signed the Tax Cuts and Jobs Act (TCJA) into law in December 2017, there were certain provisions directly affecting nonprofit organizations. The most widely debated topic of that act affecting the Nonprofit industry was, without doubt, the assessment of unrelated business income tax (UBIT) on certain transportation fringe benefits that nonprofits provide to their employees. There seemed to be a unanimous sentiment among nonprofit personnel and professionals that the provisions requiring nonprofits to treat certain fringe benefits (including parking) to employees as UBIT were illogical. However, in December 2018, when the IRS issued additional guidance on calculating UBIT on parking provided to employees, things started to get real.
However, the nonprofit industry may have recently received the Mea Culpa from the IRS it had been waiting for. On December 20, 2019, the President signed into law the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (the “Disaster Act”). This legislation retroactively repealed the increase in UBIT by amounts paid or incurred for certain fringe benefits for which a deduction is not allowed, most notably, qualified transportation fringes such as employer-provided parking. Tax-exempt organizations that paid UBIT on expenses for qualified transportation fringe benefits, including employee parking, may claim a refund. To do so, nonprofits should file an amended Form 990-T within the time allowed for refunds. More information on this process can be found on the IRS.gov’s web page: How to Claim a Refund or Credit of UBIT or adjust Form 990-T for Qualified Transportation Fringe Amounts.