03/22/2019

National Organization Urges Congress to Repeal Benefits Tax

OSAE among those urging Congress to repeal the fringe-benefits tax

The American Society of Association Executives (ASAE) is urging associations to sign on to a letter asking Congress to repeal the unrelated business income tax on certain employee benefits provided by associations and other tax-exempt organizations. The Ohio Society of Association Executives (OSAE) has signed its support to the letter.

The tax on nonprofit fringe benefits, such as parking and mass transit assistance, was implemented as part of the 2017 Tax Cuts and Jobs Act. The tax is proving to be a huge burden for the nonprofit community, including churches and small charities that have little or no experience dealing with the IRS and insufficient guidance on how to calculate the value of parking and other benefits provided to their employees. ASAE and the UBIT Coalition have been pushing Congress to repeal the tax for more than a year.

“Not only do these organizations now have to pay a hefty tax on these benefits, but they must put a value on the benefit offerings as well, which can be difficult when there is no clearly defined valuation method,” the ASAE sign-on letter reads. “Although the IRS issued some interim guidance in late 2018, it is incomplete and raises more questions for tax-exempt organizations that struggle to comply.”

The new tax is also proving to be an administrative burden for nonprofit groups. A recent survey by Independent Sector revealed that organizations will see an average of nearly $12,000 diverted from their mission in order to comply with this new requirement.

Reps. Mark Walker (R-NC) and Tom Suozzi (D-NY) introduced a bill earlier this month to repeal the tax. The bill is a companion to legislation introduced in the Senate by Sens. James Lankford (R-OK) and Chris Coons (D-DE).

UBIT repeal will be a key issue for participants to discuss with congressional staff during American Associations Day, ASAE’s legislative fly-in, taking place next week on March 28-29. ASAE is asking associations that are interested in this issue to sign on to the letter by March 27. To add your organization’s name to the letter, email Mary Kate Cunningham at mcunningham@asaecenter.org.

This article was provided to OSAE by the Power of A and ASAE's Inroads.