Nonprofit organizations are breathing a sigh of relief as the Nonprofit Parking Tax finally comes to its rightful end. Batts Morrison Wales & Lee (BMWL), an accounting firm dedicated to serving nonprofit organizations, has successfully led the charge for repealing Section 512(a)(7). The following article is published by permission from BMWL. BMWL provides audit and assurance, tax, and strategic advisory services to nonprofit churches, charities, ministries, schools, foundations, and associations across the United States from their national headquarters in Orlando, Florida. The original article can be found on their website here.
The Nonprofit Parking Tax is Repealed Retroactively
As part of a large spending package to avoid a government shutdown, Congress passed legislation repealing the infamous “Nonprofit Parking Tax” – an income tax on the cost of parking provided by nonprofit organizations to their employees performing exempt charitable, religious, and educational activities. The repeal of the Nonprofit Parking Tax is retroactive – the legislation literally states that the effective date of repeal is as if the tax was never in the original law. The bill was signed by President Trump on December 20, 2019.
“It is about time that this ill-advised and absurd tax on America’s nonprofits found its way to the dust bin of history,” said Mike Batts, managing partner of Batts Morrison Wales & Lee. “We said this was a bad idea from the beginning, and it didn’t get better with age. What is saddest about it is the immeasurable amount of money, time, energy, and focus the nonprofit sector had to expend in an attempt to comprehend and apply this bad law,” added Batts. “I hope future Congresses will have more respect for the nonprofit community and all that it does to meet the needs of people throughout the world.”
Given that the repeal is retroactive, organizations that have filed returns paying the tax may amend those returns to obtain refunds. We expect that the IRS will issue guidance on the refund process. We are hopeful that the IRS might automatically generate refunds for organizations that filed income tax returns solely to pay the Nonprofit Parking Tax, without the need to file amended returns. We will monitor the IRS’s published guidance in this area and we will keep our clients informed.