Nonprofit Parking Lot Tax Repealed

One of the provisions included in the Tax Cuts and Jobs Act approved on December 20, 2017, related to nonprofit organizations and unrelated business income (UBI) taxes on qualified transportation fringes.  The provision required nonprofits to include certain transportation and parking fringe benefits paid or incurred after December 31, 2017, in UBI that are no longer deductible under IRC section 274 for for-profit entities.  

As a result of this Act, many nonprofit organizations were required to file Form 990-T to pay these taxes.  On December 20, 2019, the President signed the Taxpayer Certainty and Disaster Tax Relief Act which repealed this tax for nonprofits.  Any nonprofit organization that paid taxes on transportation fringe benefits will be able to claim a refund. 

According to the IRS website, to claim a refund, the organization must file an amended Form 990-T.  If the amended return is being filed only to claim the refund, write “Amended Return – Section 512(a)(7) Repeal” at the top.  The IRS has some additional instructions for amending each of the 2017 and 2018 990-T forms which can be found on their website.  There are time limits for filing for refunds, which are normally three years from the time the original 990-T was filed or two years from the time the tax was paid, whichever was later.

If your organization paid taxes on transportation fringes, make sure you file an amended Form 990-T to get your refund.   

Posted by: Carrie Minnich, CPA