News Bill filed to repeal federal tax on transportation benefit

A federal bill was filed on Feb. 14 by House Majority Whip James Clyburn (D-South Carolina) to repeal the so-called “parking lot tax” on nonprofits that provide employees with transportation benefits.

The bill, H.R. 1223, the “Stop the Tax Hike on Charities and Places of Worship Act of 2019.” The legislation would repeal IRS Section 512(a)(7) that taxes nonprofit expenses for providing transit passes and parking to employees. The bill would cover the $1.8 billion “cost” by raising the corporate tax rate by 0.03 percent from 21 to 21.03 percent. Congressman Clyburn noted he hopes the bill will skip the committee process and pass under an expedited process because there is only a month before nonprofits have to start paying the tax.

The Providers’ Council’s national partner, the National Council of Nonprofits, participated in a press conference with Clyburn to announce the bill. You can see highlights on their Twitter page here. Additionally, here is the National Council’s input on what nonprofits will have to pay and when:

Nonprofits that filed estimated taxes in the past have probably been making additional payments on the transportation tax already. The guidance issued on December 10 (IRS Notice 2018-100) waived penalties and late fees for nonprofits that had not filed Form 990-Ts in the past. The idea behind the waiver is that the transportation tax is unusual and the guidance wasn’t issued until nearly a year after enactment, so the IRS cut some slack for churches and other nonprofits that weren’t regular filers. That waiver or grace period ran out at the end of the year and all nonprofits subject to the tax have payments coming due.

“The bottom line is the bottom line – nonprofits are having to make tax payments soon if this law isn’t repealed. That money will be out-of-mission costs, meaning that dollars to the government are dollars not going back into communities to address the problems that nonprofits are dedicating to solving.”

The Council will keep members apprised of the progress of H.R. 1223 and any potential repeal of the “parking lot tax.” Questions about this issue can be directed to Bill Yelenak by email at bill@providers.org or phone at 617.428.3637 x122.

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