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Congress puts the breaks on “nonprofit parking tax”

01-07-2020

Donna M. Mullin, JD, CPA, Director

Nonprofits no longer have to worry about paying taxes on parking provided for employees after Congress and the President retroactively repealed what had been called the “church parking tax.’’

Passed by Congress on December 20, the Consolidated Appropriations Act, 2020 repealed IRC Section 512(a)(7) that imposed the tax on nonprofits for providing qualified transportation fringe benefits, including employee parking.

Significantly, the repeal is retroactive to 2017 – meaning that nonprofits that have already paid the tax are entitled to refunds.

The repeal does not apply to for-profit businesses on whom a similar tax was imposed by a different code section.

 

What nonprofits should do now

In the short term, if you filed returns paying the tax for 2018 and or 2019, we recommend you hold filing amended returns for refunds to allow the IRS to address the change and see if they will offer a simplified refund option.

If you are paying estimated tax payments solely because of this tax, check with your tax accountant to confirm that you can discontinue making estimated payments.

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