Nonprofits Still Seek Repeal of Fringe Benefits Tax
This is a must-solve issue for nonprofit organizations
With limited time left in this year’s Congressional calendar, must-solve issues continue to saturate the legislative agenda. One such issue – also the center of the American Society of Association Executives' (ASAE) public policy efforts – is the repeal of a 21-percent tax on parking and transit benefits provided by tax-exempt employers. ASAE and its UBIT Coalition, which includes the Ohio Society of Association Executives (OSAE), are urging all stakeholders to keep sounding the alarm in Congress and urge legislators to pass repeal legislation, particularly in advance of what will surely be a tempestuous presidential election year.
The Tax Cuts and Jobs Act (TCJA), signed into law December 2017, created Section 512(a)(7) to levy this unfair, burdensome tax on nonprofit employers who provide parking and/or transit benefits to employees. A separate but related provision of TCJA prohibits for-profit businesses from deducting costs to provide parking and/or transit benefits to employees. As such, Congress created Section 512(a)(7) to “level the playing field” between nonprofits and for-profits. Section 512(a)(7) increases the amount of Unrelated Business Taxable Income (UBTI) reportable by a nonprofit organization and revenue gained by an organization through means unrelated to its mission is subject to the Unrelated Business Income Tax (UBIT).
Historically, UBIT statute has applied only to revenue sources – money coming in. For the first time in history, however, the TCJA applies UBIT to an expense – money going out – that pays for employee benefits.
ASAE and its UBIT Coalition, which includes over 100 like-minded organizations, steadfastly advocate repeal of Section 512(a)(7). The solution is close, but it must remain top-of-mind for stakeholders across the country. Do not let up. Join us and make your voice heard in Congress! To learn more and get involved, email Jeff Evans, ASAE’s associate director of public policy, at firstname.lastname@example.org.
This article was provided to OSAE by the Power of A and ASAE's Inroads.