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IRS Issues Parking Tax Preliminary Guidance

Back in December, the Internal Revenue Service (“IRS”) issued preliminary guidance that proposes clarifications to when nonprofit organizations should pay a 21 percent unrelated business income tax on employer expenses associated with employee parking. The notice tells nonprofits to use a four-step calculus for applying a value on taxable parking spaces. Another notice permits tax penalty waivers for nonprofits that did not submit quarterly estimated tax payments regarding those transportation benefits. The IRS had not issued any guidance or relief for applying the tax on other transportation benefits like subway or bus passes. Nonprofits impacted by the tax on parking expenses can submit comments. Read More.

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North Carolina Passes UBIT Provision on Nonprofit Parking

In case you missed it, the North Carolina Legislature last month passed a bill that decouples state unrelated business income tax (“UBIT”) on nonprofit parking from the Tax Cuts and Jobs Act. The provision safeguards tax-exempt organizations from being taxed an additional 3-percent state UBIT or filing state tax forms for employees’ parking expenses. The North Carolina Center for Nonprofits had asked state legislators to decouple the state tax code to prevent state income tax for expenses. North Carolina’s governor had previously vetoed a budget bill that featured the UBIT amendment, but the Legislature overruled the veto. Thus, the UBIT provision is effective. Read More.

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