Nonprofit Parking Tax Is Repealed as Part of Government Spending Bill
I was wrong. I was on record opining that the nonprofit parking tax would never be repealed.
But, it is a December miracle, because late on Friday, December 20, 2019, President Trump signed a $1.4 trillion spending package that included the repeal of the nonprofit parking tax! The nonprofit parking tax (which applied to mass transit reimbursement as well as certain parking benefits paid by nonprofits) was added as section 512(a)(7) of the tax code in December of 2017. The nonprofit parking tax was unprecedented because it was a tax on a category of expenses—not revenue. For two years, nonprofits and their advisors have struggled to determine how to properly calculate the tax. Chiefly among the concerns about the tax was the lack of clarity about how to treat the expense involved with a surface parking lot owned by a nonprofit where nonprofit employees parked without charge.
What Should Nonprofits Do Now?
The repeal of the parking tax is retroactive back to 2017. Every nonprofit that paid tax on the transportation fringe benefits should file an amended 990T to claim a refund of the taxes paid.