Repeal of Unrelated Business Income Tax on Qualified Transportation Fringe Benefits for Tax-Exempt Employers

The federal government decided to give a Christmas present this year to tax-exempt organizations, just 2 years after the government decided to leave them with a lump of coal in their stocking.  The tax on Qualified Transportation Fringe Benefits (or employee parking) has been officially repealed.

On December 20, 2019, Further Consolidated Appropriation Act of 2020 was signed into law.  The main purpose of this Act was to appropriate government spending going forward into 2020 and avoid another government shutdown.  However, included in this spending bill (along with the creation of the new Space Force) was the repeal of the UBI tax on costs of providing parking to employees of tax-exempt organizations.

The repeal is effective as of December 31, 2017, making it retroactive to the start date of the original “parking tax”.  This means that you will be able to apply for a refund of all UBI taxes that you have paid to date on employee parking.  The mechanism for how and when we can apply for these refunds has not been provided by the IRS yet.  We will be looking out for further announcements or instructions.

If you have any question on this repeal and what it might mean for your organization, please contact us.