As Congress continues to arm-wrestle over repeal, IRS/Treasury released interim guidance on I.R.C. Section 512(a)(7) – with a retroactive provision for decreasing or eliminating the tax.



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 has a “faculty & staff only” dirt (well, sand and crushed oyster shell) parking lot that has room for 22 vehicles.  All other parking at MBC is open the general public in accordance with Notice 2018-99.  Three times a year, due to heavy rains, MBC has this parking lot graded to ensure proper drainage (akin to snow removal in other climes).  The cost is $800 per grading – $2,400 annually.

Based upon the newly-released interim guidance, MBC would be required to file Form 990-T for their tax year ended 6/30/18 (2017 Form 990) and in future years.  Given the scenario above, they’d be required to pay $294 annually ($2,400 – $1,000 x 21%) for having parking spaces designated as “Employees Only” or some facsimile thereof.

However, they could use a “get out of jail free card” that is provided in the interim guidance by “un-designating” the employee parking spots prior to March 31, 2019.  This “un-designation” (changing signage, access, etc.) would be considered retroactive to January 1, 2018 thus getting rid of the “Parking Tax” for MBC.

We suggest that they wait to un-designate the small, dirt lot (change signage, access, etc.) until closer to March 31, 2019 because it still appears that Congress may repeal the “Parking Tax” under I.R.C. Section 512(a)(7).

**We’ve featured MBC’s same set of facts in both our June 27, 2018 and November 7, 2018 editions where we point out different aspects of the “Parking Tax.”  Here is another update.



From Notice 2018-99:

Until March 31, 2019, taxpayers that have reserved employee spots as defined in this notice may change their parking arrangements (changing signage, access, etc.) to decrease or eliminate their reserved employee spots and treat those parking spots as not reserved employee spots for purposes of this notice retroactively to January 1, 2018.

A taxpayer that owns or leases all or a portion of one or more parking facilities must identify the number of spots in the parking facility, or the taxpayer’s portion thereof, exclusively reserved for the taxpayer’s employees (“reserved employee spots”). Employee spots in the parking facility, or portion thereof, may be exclusively reserved for employees by a variety of methods, including, but not limited to, specific signage (for example, “Employee Parking Only”) or a separate facility or portion of a facility segregated by a barrier to entry or limited by terms of access.



  • The IRS and Treasury released Notice 2018-99 and Notice 2018-100 that contain “interim guidance” about the “Parking Tax” under I.R.C. Section 512(a)(7).
  • Your institution should look at last week’s “Tax Tips” (“Guidance Released on ‘Parking Tax’” – December 12, 2018) for more information.
  • Many Bible Colleges and Seminaries may be able to “decrease or eliminate” the tax by “changing their parking arrangements” prior to March 31, 2019.
  • It still appears that I.R.C. Section 512(a)(7) will be repealed by Congress.

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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