As more and more institutions are coming to terms with the “Parking Tax” being a sad reality and begin to look at the step-by-step calculations set forth in Notice 2018-99, many are wrestling with what constitutes “general public” parking spots.



Troas Bible College (TBC) 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 TBC Accounting Team just did a video call with our team.  They began the call by saying that they were using our templates to calculate their “total parking expenses” and then looking at the four-step, IRS-deemed “reasonable method” for calculating any potential additions to unrelated business income under I.R.C. Section 512(a)(7).

They said, “We are wondering about who would be considered ‘general public’ under the IRS’ Step 2?  Would students be employees or general public?  What about people who deliver office supplies or food stocks to our institution?  And, what about ‘outside contractors?’”

“Well,” we say, “according to Notice 2018-99 you have to look at all facts and circumstances, but, generally, students and delivery people would be considered to be members of the ‘general public,’ whereas outside contractors would be included in your employee counts.”

“So if we have not parking spots reserved for employees and 300 total parking spots in our lot, what does that mean?”

“Well, how many employees park in the lot during normal hours of your activities on a typical day?”  We ask.

“60 employees.  We already heard that from our facilities folks.”

“Okay, so you are saying that 20% or 60 over 300 is your employee parking percentage.  Thus, 80% of your usage is by the general public, meaning your primary usage is by the general public and…”

“So,” they cut in, “because we did not have any tax from Step 1, and because our ‘primary usage’ is by the ‘general public,’ we can stop after Step 2 and don’t owe any tax.”

“That would appear to be the case,” we say.

“Oh,” says the TBC team, “well that’s good…”



From IRS Notice 2018-99 (page 10):

For purposes of § 274(a)(4) and this notice, the “general public” includes, but is not limited to, customers, clients, visitors, individuals delivering goods or services to the taxpayer, patients of a health care facility, students of an educational institution, and congregants of a religious organization. The general public does not include employees, partners or independent contractors of the taxpayer. [Underlines added.]



  • Although there is still some hope for repeal of the “Parking Tax” under Internal Revenue Code Section 512(a)(7), your institution should be considering the potential cost of the tax – not just for tax years ending in 2019, but, potentially 2018 also.
  • Note that if you have “reserved employee spots” you will likely owe some tax – unless you un-designate some/all of those spots by March 31, 2019.
  • When applying the four-step method, make sure you understand which groups are included in the IRS’ definition of “general public.”
  • Step 2 looks at a “primary use test” whereby the “primary use” means greater than 50 percent of actual or estimated usage of the parking spots in your parking facility.


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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