The Parking and UBIT issue continues to be at the forefront of many of our minds.  Maybe it’s time we start looking at potential streamlined solutions.



Idaho Bible College and Seminary (IBCS) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(i).  They are not required to file Form 990 annually.  But, for the first time, they may be required to file Form 990-T!

IBCS’s Accounting Team has been closely watching the issue of “imputed income” for employee parking (and other fringe benefits) issue included in Internal Revenue Code Section 512(a)(7) as imposed upon us by the “Tax Cuts and Jobs Act” of 2017.

They call us – full of incredulity – to ask, “Are we seriously going to have to pay taxes on expenses we’ve made for employee parking?  That makes no sense.”

We started by telling them that we are still awaiting guidance from the IRS, but that model is certainly a possibility.

They respond, “Let us get this straight.  We’ve accumulated our parking lot expenses such as depreciation, maintenance, striping, sweeping, snow removal, utilities, and security.  They total $87,000.  Our parking lot has 300 spaces and 45 of those are used, on average, by faculty and staff (15%).  So, if we are allowed to take the $1,000 specific deduction, the our tax bill would be $2,709 ($87,000 – 1,000 x .15 x .21), right?”

“That could be,” we say (not very helpfully.)

Then, we need to file a Form 990-T – on paper – and pay the taxes, right?”

“That could be,” we say (not very helpfully.)  However, we say – as a lightbulb goes on above our heads – what if we share a streamlined solution with the IRS?”

“How might that work?” They ask.

What if the IRS constructs a web-based eform/worksheet to handle payments based upon I.R.C. Section 512(a)(7)?  The “e-worksheet” could allow organizations to list amounts with respect to “depreciation and other costs,” devise the percentages of employee parking for one or more lots, calculate the amount of tax owed under 512(a)(7), and allow on-line payment of the taxes owed.  Hmmm.

Maybe use of the e-worksheet would be limited to those organizations who would only be required to file Form 990-T due to the tenets of 512(a)(7).  Maybe there should be a limitation of, say, $5,000 in tax owed for qualification to utilize this new “form.”  Sure, there are other tweaks – but, dang – let’s start thinking about this in a manner that makes this provision (if it does not get repealed) as easy as possible for the IRS, the credit card companies, the CPAs, and – most of all – the taxpayers/organizations…



From the TEGE Joint Council Sesssion, 9/11/18:

“The thing I can comment on is that the section 512(a)(7) provision is tied incredibly closely to the section 274 provision, which is the for-profit provision. I just want to note that 274 is what 512(a)(7) is based on, whether something is deductible under 274. We are working on getting guidance on what is not deductible. Section 512(a)(7) is based on whether it’s not deductible under 274 and so we are working on getting guidance but just recognize that those two are incredibly closely tied to each other and the 274 provision is the provision for for-profit entities. I think that that’s probably the best we can say, that 274 deals with expenses and so that’s where the starting point is for us.”

From the DRAFT 2018 Form 990 instructions (page 17):

If the combined amount of an organization’s gross investment income and other unrelated business taxable income, including any addition to UBTI attributable to expenses for a qualified transportation fringe required by section 512(a)(7), is $1,000 or more, the organization must report the investment income, other unrelated business income, and the expenses paid or incurred for a qualified transportation fringe on Form 990-T. [Underline added.]



  • I.R.C. Section 512(a)(7) appears to include a provision whereby your institution may be required to “impute” income – and pay taxes on the cost of providing employee parking.
  • The draft 2018 Form 990 instructions seem to support the notion that your institution may have new income based upon “the expenses paid or incurred” for employee parking.
  • There are five bills in Congress that would repeal this rule.
  • Let’s start talking about – and getting the IRS to look at – constructing a streamlined solution for the payment of this ill-conceived potential tax.

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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