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This Tax Will Divert Funds from Mission-Related Work

by Sarah Skillin Woodard

On December 22, 2017, President Trump signed into law Public Law No. 115-97, unofficially called the Tax Cuts and Jobs Act, imposing a 21-percent unrelated business income tax (UBIT) on nonprofits that provide their commuting employees with parking and transit benefits. (This does not include non-commuting mileage reimbursement.)

In about two weeks, charitable nonprofits, houses of worship, foundations, and other nonprofits will have to send in estimated payments to the IRS to pay taxes on these expenses. More tax payments will be due a month later. That is, unless Congress will listen to nonprofits and repeal the tax in time.

Take Action

A national sign-on letter is now circulating to call on Congress to repeal this tax as soon as possible. You can add your organization to this national sign-on letter until Wednesday, April 3, 2019. Learn more about this new tax on nonprofits.

We’re hearing from members that this tax is pulling thousands of dollars away from their missions. The tax is calculated differently depending upon whether the nonprofit organization owns or leases their parking. To learn more about how this tax may affect your organization, please read the interim guidance provided by the IRS back in December of 2018.

2 thoughts on “This Tax Will Divert Funds from Mission-Related Work

Mary Malia says:

I’m a bit confused. Doesn’t this apply to ALL businesses PLUS nonprofits? That’s what I was told at the Finance Conference last year. Just trying to ensure I’m clear. This makes it sound like its only on NPOs.

Sarah Woodard says:

Hello, Mary,

Thank you for your comment. This is a relatively new income tax on the expense of parking and transit benefits offered to employees of nonprofit corporations only. Our understanding is that the rationale behind this tax was to make things fairer to for-profit corporations who lost the ability to deduct expenses for employee parking and transit benefits in the Tax Cuts and Jobs Act of 2017. This web page might clarify matters.

Please reach out if you have further questions.

Sarah
Director of Advocacy & Public Affairs
MANP

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