Transportation Benefits Tax: Interim Guidance and Congressional Action

The new 21% tax for nonprofits on employee transportation benefits resulting from 2017 comprehensive tax reform has been getting recent attention from the Treasury in the form of interim guidance and from the US House in the form of proposed legislation.

The interim guidance released by the IRS on December 10 has been described as somewhat lenient by the press, since it forgives any penalties for nonprofits that have already filed that may have misunderstood how to calculate the new tax burden, and allows a reasonable test for employee parking. However, nonprofit leaders, including church leaders, are calling on the lame duck Congress to repeal the transportation tax altogether.

Responding to the outcry, the current Chairman of Ways and Means, included the repeal in the tax package put forth by his Committee this week. Elation from the nonprofit sector was short-lived, however, when they were informed that Johnson Amendment repeal was also being proposed in the same package. Nonprofits around the country have vehemently opposed the politicization of the sector through Johnson Amendment repeal.

Since it is unclear whether Congress will be able to repeal the transportation tax, nonprofits are advised to familiarize themselves with the interim guidance and on the issue of qualified parking.

Post date: December 14, 2018
Topics: National Legislative Updates

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