The “Parking Tax” imposed under I.R.C. Section 512(a)(7) upon enactment of the 2017 Tax Cuts and Jobs Act has now been retroactively repealed under the Taxpayer Certainty and Disaster Tax Relief Act signed into law on December 20, 2019. The 2019 Act repeals the highly contested unrelated business income tax on tax-exempt organization disallowed fringes retroactively—as if it never existed. This means many nonprofits no longer owe this tax and will be due refunds of amounts related to this tax that were reported and paid on Form 990-T over the past two years. Due a refund? Stay tuned! We’re awaiting news from the IRS regarding the refund process—hopefully, a streamlined one.
The 2019 Act also simplifies the private foundation excise tax on investment income by replacing the two-tier system (1% and 2%) with a flat rate of 1.39%. The new rate is effective for tax years beginning after December 20, 2019.
For additional details, refer to the law (H.R. 1865, Division Q, AKA the Taxpayer Certainty and Disaster Tax Relief Act of 2019, SECs. 207 and 302) or visit irs.gov/charities-and-nonprofits. Be sure to watch for future NFP Section eAlerts that include more information as it becomes available.