IRS Issues Guidance on Application of the Nonprofit Parking Tax

As part of the big tax reform law passed by Congress and signed into law by President Trump late last year (the Tax Cuts and Jobs Act), provisions were added that relate to certain fringe benefits provided by tax-exempt employers to their employees. Those provisions are effective for the year 2018. One provision, new Section 512(a)(7) of the Internal Revenue Code, says that tax-exempt employers (churches, charities, etc.) must treat as unrelated business taxable income the cost of providing parking to their employees, subject to IRS guidance. What that means in plain language is that Congress created a federal income tax on the cost of employee parking provided by churches, charities, and other nonprofits.