Tax Tips Logo ImageISSUE

We are still celebrating the retroactive repeal of the “Parking Tax.”  Last week the IRS published instructions for filing amended Form 990-Ts for the years where refunds are now due.  Congress had asked the IRS to “establish an expedited process.”  This fell far short of that.

SITUATION

Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

MBC’s Controller called us to ask about filing for refunds of the “Parking Tax.”

“We saw your update on the IRS’ guidance that was released last week.  Did I miss something or is this not very ‘expedited?’”

“Sadly, you did not miss anything.  The IRS’ guidance was basically standard fare for amending a Form 990-T.  No special website, no special P.O. Box, no special team appointed to ‘streamline’ and/or ‘expedite’ the processing.  Kind of a bummer.”

“So, what do we do?”

“Well, the amended return steps are different for 2017 returns and 2018 returns.  This is because the forms were different.  The step-by-step instructions are straightforward and pretty clear.  We will file a new, amended Form 990-T for each year and follow the IRS 3-step instructions.”

Then they asked, “Well, we only paid $119 for the 2017 return and $241 for the 2018 return.  Is it even worth amending either year?  We’ve been talking to other schools our size and their accountants want more for preparing an amended Form 990-T than they paid in.”

“Yep.  That can happen.  We will amend the Form 990-Ts free of charge for our clients, but it is basically a cost-benefit decision for many schools.”

RULES

From IRS website, (https://www.irs.gov/forms-pubs/how-to-claim-a-refund-or-credit-of-unrelated-business-income-tax-ubit-or-adjust-form-990-t-for-qualified-transportation-fringe-amounts):

The Taxpayer Certainty and Disaster Tax Relief Act of 2019 retroactively repealed Internal Revenue Code (IRC) Section 512(a)(7), which increased unrelated business taxable income by amounts paid or incurred for qualified transportation fringes. Congress had previously enacted this provision for amounts paid or incurred after December 31, 2017.

If you wish to claim a refund or credit of the UBIT reported on your Form 990-T for 2017 or 2018 under Section 512(a)(7), you may do so by filing an amended Form 990-T as described in the form’s instructions and do the following as well.

  1. Write “Amended Return” at the top of Form 990-T.  If the amended return is being filed only to claim a refund, credit, or adjust information due to the repeal of Section 512(a)(7), write “Amended Return – Section 512(a)(7) Repeal.”
  2. Complete the Form 990-T as you originally did, but:
    • For a 2017 Form 990-T
      • Reduce the entry on the line on which you originally included the 512(a)(7) amount by that amount. This would have been on line 12 (Other income) if you followed the Recent Developments article originally posted to IRS.gov in filing the 2017 Form 990-T.
      • Complete the rest of the Form 990-T based on that revised entry.
      • Include on the “Other” sub-line of line 45g (Other credits and payments) the amount of tax from line 48 (Tax due) of the original return (if any).
      • If your changes result in your having made an overpayment, you should enter that amount on line 49 (Overpayment) line of the amended return, which you may request as a refund or credit on line 50.
    • For a 2018 Form 990-T
      • Enter “0” (zero) on line 34 (Amounts paid for disallowed fringes).
      • Complete the rest of the Form 990-T based on that revised entry.
      • Include on the “Other” sub-line of line 50g (Other credits, adjustments, and payments) the amount of tax from line 53 (Tax due) of the original return (if any).
      • If your changes result in your having made an overpayment, you should enter that amount on line 54 (Overpayment) line of the amended return, which you may request as a refund or credit on line 55.
  3. Attach a statement indicating the line numbers on the original return that were changed and the reason for each change (for example, stating “repeal of Section 512(a)(7)”).

Please keep in mind that the time limits for filing refund claims found in IRC Section 6511 apply to these refund claims. Typically, these time limits are three years from the time the original Form 990-T was filed or two years from the time the tax was paid, whichever is later.

BOTTOM LINE

  • Last week, the IRS has released guidance on requesting “Parking Tax” refunds using amended Form 990-Ts.
  • The Service is to be commended for getting guidance out quickly – basically within about a month of the repeal.
  • The specific instructions are different for 2017 forms and 2018 forms.
  • What about amounts paid in for 2019 “Parking Tax” on Form 990-T not yet filed? There is some discussion that Form 4466, “Corporation Application for Quick Refund of Overpayment of Estimated Tax” might fit the bill here.  Note that this form has some requirements that may not make sense for smaller organizations.

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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