Tax Tips Logo ImageISSUE

With the “Parking Tax” retroactively repealed, how do those institutions who paid this tax over the past few years apply for a refund?

 

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.

The Accounting folks at MBC call to ask us to apply for a refund of the unrelated business income taxes they paid with their 2017 and 2018 Form 990-Ts for the imputed income from their employee parking expenses.

We tell them that we could file amended Form 990-Ts for both years.  However, it may be best to wait for a few weeks.  Ultimately, filing amended returns now may create a longer wait for your refund.  There is a push for the IRS to develop – and quickly – an expedited process for “Parking Tax” refunds.

In a letter dated January 8, 2020, the top two leaders of the House Ways and Means Committee requested that the IRS “establish an expedited process” for Parking Tax refunds.  It is hoped that the IRS will come through within 30 days… Film at 11.

 

RULES

From House Ways and Means Committee letter to IRS (January 8, 2020):

“We write today to request that the Internal Revenue Service (IRS) establish an expedited process for tax-exempt organizations to obtain refunds of unrelated business income tax (UBIT) paid on parking and transportation benefits provided to their employees.

“Given that the tax was repealed retroactively, organizations that paid UBIT on parking and transportation benefits are now entitled to a refund.  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.  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.”

 

BOTTOM LINE

  • The “Parking Tax” was repealed retroactively on December 20, 2019.
  • In the future you should not have to deal with those bizarre spreadsheets and IRS Notice 2018-99.
  • An interesting issue arises for any institutions who paid penalties for late filing of Form 990-T due to this now-repealed law.
  • Hopefully, the IRS will issue guidance in the next few weeks on an expedited refund process.

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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