House Ways and Means Committee Chairman Kevin Brady (R-TX) last night offered a “manager’s amendment” to his year-end tax package which includes a full repeal of UBIT on qualified transportation and parking fringe benefits provided by tax-exempt organizations.
Included in last year’s Tax Cuts and Jobs Act, the provision forces tax-exempt groups to pay tax on transportation and parking benefits provided to employees. ASAE and the UBIT Coalition have been seeking repeal or delay of this tax for almost a year. Fringe benefits tax repeal is one of several technical fixes included in Brady’s year-end tax bill.
“The policy proposals in this package have support of Republicans and Democrats in both chambers,” Brady said in a statement. “I look forward to swift action in the House to send these measures to the Senate.”
The House is expected to vote on the tax package as early as tomorrow. In addition to fixing technical errors in the tax law, the bill would extend about 30 tax breaks that are at risk of expiring and provide tax relief for victims of the California wildfires and other natural disasters that occurred this year.
While the bill is widely expected to pass the House, it faces a less certain fate in the Senate where it will need Democratic votes. Some Senate Democrats have expressed little interest in helping Republicans fix a tax law the GOP passed last year without Democratic support. The price tag for the tax package could also be a point of contention. The Congressional Budget Office (CBO) this week estimated the package would cost $55 billion over 10 years.
There is bipartisan support for repealing the tax on nonprofits’ transportation and parking benefits, however. Brady said the provision should be repealed to “proactively [eliminate] any potential uncertainty for our churches and community organizations so nothing distracts them from their core mission.”
Earlier this week, Sens. James Lankford (R-OK) and Chris Coons (D-DE) sent a letter to Treasury Secretary Steven Mnuchin urging him to delay implementation of the fringe benefits tax until regulations can be written for nonprofits that are uncertain how to calculate their tax liability in this area.
There are other provisions in Brady’s tax package that have bipartisan support as well. There is strong support for fixing an error in the tax law that unintentionally requires retailers and restaurants to write off the cost of renovations to their stores over a period of years. Democrats are also supportive of tax relief for victims of wildfires and other disasters.
ASAE is encouraging organizations to support this repeal effort by sending this model letter to members of the House and Senate.