IRS Provides Guidance on New Parking Tax

December 12, 2018 — On December 10, 2018, the IRS issued interim guidance on a new tax that is impacting tax-exempt entities (including church organizations). As a result of the provision in the Tax Cuts and Jobs Act, tax-exempt entities are required, beginning in 2018, to report and pay taxes on amounts spent to provide parking and other qualified transportation fringe benefits to employees. The Church Alliance has been urging lawmakers to repeal this “parking tax,” and bills have been introduced in Congress that provide for a repeal.

The IRS has released guidance for impacted entities to assist them in determining how much of their total parking expenses are attributable to employee parking. Such amount may either be denied as a deduction for taxpaying companies, or increase the unrelated business income tax (“UBTI”) of tax-exempt organizations. The guidance provides a four-step safe harbor approach of making this determination. The guidance also provides for a waiver of penalties for certain tax-exempt organizations that have not made estimated tax payments that are now required because of the new parking tax. This waiver applies to tax-exempt organizations that were not previously required to file a Form 990-T, assuming the organizations timely and properly file a Form 990-T for 2018.

The IRS guidance requests comments, which the Church Alliance intends to provide during the comment period.

A detailed summary of the guidance can be found here.

Links to the two Notices which make up the interim guidance can be found here and here.