Ways and Means Democrats this week called on the Internal Revenue Service (IRS) to issue guidance for tax-exempt organizations on how they can claim refunds for taxes paid on parking and transportation benefits they provide to employees.
The 2017 tax law required associations and other nonprofit groups to pay a 21% unrelated business income tax (UBIT) on the value of these employee benefits. Sustained advocacy from ASAE and its UBIT Coalition resulted in Congress repealing the tax in a year-end government spending bill last month. Repeal of the fringe benefits tax is retroactive for taxes that nonprofits have paid or accrued after Dec. 31, 2017. Repealing the nonprofit fringe benefits tax was ASAE’s top legislative priority for two years.
In a Jan. 8 letter to the IRS, House Ways and Means Committee Chairman Richard Neal (D-MA) and Ways and Means Oversight Subcommittee Chairman John Lewis (D-GA) said that the tax was unfair to the tax-exempt community and sapped resources that nonprofit organizations need to carry out their tax-exempt missions.
“We respectfully request that the IRS implement an expedited process for providing refunds to these organizations, which do such critically important work for our communities,” Neal and Lewis said. “Additionally, we request that the IRS promptly issue guidance on the appropriate steps organizations should take in the refund process, so that they can receive the money they are owed without delay and further hardship.”
ASAE and the UBIT Coalition again wish to thank the many advocates who wrote letters and visited congressional offices in support of UBIT repeal, as well as the legislators on both sides of the aisle who understood the compliance challenges and administrative burdens that the employee fringe benefits tax created for nonprofit groups.