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The “Parking Tax” (I.R.C. Section 512(a)(7)) is being retroactively repealed this week.  Thanks to Congress.  But just begin to imagine the time, dollars, and brain toil we’ve all wasted – especially the already overburdened IRS – on this insane, ludicrous two-year debacle.  Oh, never mind…

 

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MBC’s CFO called us and excitedly exclaimed, “I hear the ‘Parking Tax’ has been repealed!”

“Well, not yet,” we reply, “but it certainly looks as if it will be gone this week.”

“So, is it prospectively repealed or retroactively repealed?”

“It looks like its retroactive.  As part of the two-part “Appropriations Bill,” H.R. 1865 contains ‘Division Q’ which they are calling the ‘Taxpayer Certainty and Disaster Tax Relief Act,’ the ‘Parking Tax’ would be repealed as if it never was.”

“That’s great.  How do we get our money back for the years we’ve paid UBIT?”

“That is to be determined.  Hopefully, the IRS will develop a stream-lined method for applying for the Disallowed fringes ‘imputed income’ tax refunds,” we reply.

“What might that look like?”

“The dream would be a webpage – maybe akin to the 990-N filing page – where you enter your organization’s name, EIN, and amounts paid each year with Form 990-T. Then have a box(es) to check indicating ‘send me back our $$.’”

And, our favorite quote this week came from Congressman Tom Suozzi, CPA (D-NY):

“I applaud the repeal of the wrongheaded and unnecessary Unrelated Business Income Tax (UBIT), which was created as a result of the 2017 GOP tax bill and placed an additional tax burden on houses of worship and other nonprofits. I applaud Leader Clyburn for leading this fight so we can give back resources to houses of worship and charities who are helping millions of Americans by fighting the opioid epidemic, feeding the hungry, protecting civil liberties, and much more.”

 

RULES

From H.R. 1865, “Division Q, the ‘Taxpayer Certainty and Disaster Tax Relief Act”:

Sec. 302. Repeal of Increase in Unrelated Business Taxable Income for Certain Fringe Benefit Expenses.

  • IN GENERAL – Section 512(a) is amended by striking paragraph (7).
  • EFFECTIVE DATE – The amendment made by this section shall take effect as if included in the amendments made by section 13703 of Public Law 115-97.

 

BOTTOM LINE

  • After all the “NOISE,” the “Wrongheaded Parking Tax” is being repealed by Congress. This is a great thing!
  • Please disregard all of the previous writings and musings re: this tax (for perspective, see the final minutes of the final episode of “Newhart.”)
  • To be announced are IRS procedures for requesting refunds of the amounts reported and paid via Form 990-T the past few years…
  • Beyond all of this – MERRY CHRISTMAS TO ALL!!

 

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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