Request for Transition Relief on Unrelated Business Income Tax (June 26, 2018)


The Church Alliance submitted a comment to the Department of Treasury and the Internal Revenue Service, asking for transition relief related to (e.g., a delay in implementation) two new tax provisions in 2017’s tax reform law. Section 512(a)(6) of the Internal Revenue Code imposes a new complicated method of calculating unrelated business income taxes (UBIT) on tax-exempt investors such as church pension boards and church foundations. And Code Section 512(a)(7) imposes new UBIT on tax-exempt employers such as churches and synagogues for the fringe benefits, e.g., free parking and transit pass programs, these employers provide to their employees. The Church Alliance notes that both provisions significantly change current reporting and tax provisions in ways that are unclear, and thus its members and the stakeholders they serve will be unable to properly report and pay the new taxes without guidance. At a minimum, the Church Alliance requests a delay in implementation until proposed regulations have been issued and public comments have been considered and incorporated into final rules.