Of the many provisions outlined in the Tax Cuts and Jobs Act of 2017(TCJA), none were as controversial as the new tax on qualified transportation fringe (QTF) benefits. But, on Friday, December 20, 2019, President Trump signed into law a repeal of this parking tax on nonprofits!
The original provision required nonprofits, including churches, ministries, schools, and other tax-exempt organizations, to pay a 21 percent unrelated business income tax (UBIT) on parking benefits provided to their employees. Many nonprofit organizations including Church Alliance, which the Board of Retirement is a part of, and our partners ECFA began efforts early on to focus on the repeal of this tax.
The provision was repealed retroactively to its effective date. The national CPA firm Batts Morrison Wales & Lee, which serves nonprofits and churches across the country, noted that it’s “as if the tax was never in the original law.” Any nonprofit that paid UBIT related to this can file for a refund of the tax paid and there are no further reporting requirements related to this provision.
While the parking lot tax did not affect most, if any, of our Free Will Baptist churches and organizations, it is a big victory for churches and nonprofits.
*The Board of Retirement does not provide legal, accounting, or tax advice. Consult your tax professional for tax consultation.