TCJA Taxes Non Profit & Churches- Fringe Benefits & Parking Privilege Tax

[Lee B]

From the Evangelical Council on Financial Accountability:

 

We are circulating a position statement for nonprofit organizations (including churches) concerned about a provision in the Tax Cuts and Jobs Act that taxes parking benefits provided by many employers.  A new provision in the tax law requires tax-exempt nonprofit organizations to file federal income tax returns and pay unrelated business income tax (UBIT) on the cost of parking provided to employees, even if the organizations do not actually conduct any unrelated business activities.  The law states that the Treasury Department is to provide guidance on the complex issue of how cost is to be determined for this purpose.  In addition to filing federal income tax returns, many nonprofit employers affected by the new law will also be required to file state income tax returns and possibly pay a state income tax as a result of the new federal income tax.

By signing onto this position statement, you will be advocating for the repeal of this new burdensome provision in the law...either by legislation or effectively by action of the Treasury Department.  The position statement may be used to communicate these concerns to members of Congress and/or Treasury officials.

 

Actually, the TCJA's language also includes, Travel Reimbursements and  Meals in addition to some other fringe benefits which would be subject to taxation.

The consequences of rushing through a complicated tax bill in a few weeks without a single committee hearing will be coming home to roost for many more months.

 

Edited July 24, 2018 by jklcpa
more descriptive title

[Catherine]

Your link did not come through; can you please re-post?  Thanks!

[Lee B]

Sorry, I wasn't trying to post a link. This is the lead item on the council's website, which will pop up if you search.

 

[JohnH]

Recently I've been seeing lots of heat generated by the new tax on parking privileges for employees of churches and non-profit organizations.  Just curious if others on this forum have an opinion on it.  As I understand it, this tax will apply to all churches and non-profit organizations.  It essentially assigns a value to the right to park on premises, even if the parking was free to begin with.  Then the organization pays a tax of around 21% on the value of that perk. 

Can that possibly be the correct interpretation?  That in no way levels any sort of playing field, because it doesn't apply to businesses who provide on-site parking to their employees.  The provision seems to patently stupid to begin with, I'm surprised that even a politician could think it's a good idea.  But maybe I'm the one missing the point.   

[rfassett]

All of the employees of my non-profits and churches walk to work.  Problem solved.

Utterly stupid rule that will not likely see the light of day.  But then, I have seen stranger things happen.

[JohnH]

I sure hope you are correct.  But if they actually try to enforce this rule, then church employees who receive mileage reimbursements for employment-related travel would have a hard time also claiming they walk to work.  

ECFA says they have contacted the office of Congressman Kevin Brady (R-TX), Chairman of the House Ways and Means committee,  and the staffers insisted it was intentional.  If so, this will mean that virtually every non-profit and tax exempt organization will have to report UBIT.

[Abby Normal]

This article explains their "thinking". Basically, because they couldn't take away deductions from entities that don't pay taxes, they came up with making the entity pay a tax. Why is the Grinch song playing in my head?

[taxxcpa]

Commuters who aren't church members often park in church parking spaces and ride the bus to work.

[JohnH]

Interesting point.  So if the church is going to be forced to file UBIT anyhow, they may as well start charging those non-member commuters for parking as a means of offsetting the cost of  paying the tax. 

 

 

[NECPA in NEBRASKA]

I only have one non-profit and they don't even have a parking lot. It's a pool that only has street parking. I don't know how they could charge people for parking in the street. What a bunch of morons!

 

[JohnH]

@cbslee - sorry, I forgot you had started that previous thread.  I should have just posted on it rather than starting a new topic.

 

[Lee B]

That's O K, it happens all the time 

[jklcpa]

1 hour ago, JohnH said:

@cbslee - sorry, I forgot you had started that previous thread.  I should have just posted on it rather than starting a new topic.

 

 

8 minutes ago, cbslee said:

That's O K, it happens all the time 

I merged the two topics and modified the title to be more descriptive. I'm also going to post a link to this topic in the pinned post on the TCJA that appears at the top of Gen'l Chat.

[JohnH]

Thanks Judy.  That closes the circle nicely.

 

[Catherine]

Ain't Judy just the BEST?!

[Abby Normal]

Here's a collection of useful links and articles:

https://www.councilofnonprofits.org/how-tax-cuts-jobs-act-impacts-nonprofits

[Edsel]

On 7/24/2018 at 7:29 AM, rfassett said:

All of the employees of my non-profits and churches walk to work.  Problem solved.

Utterly stupid rule that will not likely see the light of day.  But then, I have seen stranger things happen.

They all walk to work?  What a co-incidence, right?  It's a miracle!!

Yes rule is utterly stupid, but it already is basking in the bright sunlight of day.  In particular, non-religious people have been banging on tax-exempt status for 40 years in order to raise property taxes on churches.  The same crowd is not as anxious to tax hospitals, schools, etc.

I hope the constituency wakes up and bangs on congress to rescind this sneaky provision.  I agree with others - apparently it was intentionally put in.