Tax Update: "Parking Tax" Repealed for Not-for-Profit Organizations
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.”
On December 20, 2019, President Trump signed the Taxpayer Certainty and Disaster Tax Relief Act of 2019 into law as part of the Further Consolidated Appropriations Act, 2020 (Public Law 116-94). This legislation provides relief for taxpayers affected by disasters AND retroactively repeals the “Parking Tax.” The repeal applies to amounts paid or incurred after December 31, 2017 (Code Sec. 512(a)(7), as amended by Section 302). It also temporarily suspends the charitable deduction limits on donations to public charities to support disaster relief, and it simplifies the excise tax on a private foundation’s net investment income so that one flat rate now applies.
How will this new law be implemented? It is likely that affected organizations will need to file amended tax returns to claim refunds, but additional guidance will be forthcoming.
For more information on how to file an amended return or seek a refund of tax paid, please contact Jen Vacha, Tax Partner, at firstname.lastname@example.org or 636.754.0230.