AICPA, Not-for-Profit Section News
December 11, 2018 – Volume 18 No. 28
The Internal Revenue Service has issued interim guidance regarding the treatment of qualified transportation fringe benefit expenses paid or incurred after Dec. 31, 2017. The new rules will help you determine the amount of parking expenses that are no longer tax deductible for for-profit taxpayers and the corresponding increase in unrelated business taxable income (UBTI) for not-for-profit taxpayers.
Under a special rule, employers will have until March 31, 2019, to change their parking arrangements thereby potentially enabling them to reduce or eliminate potential UBTI with respect to parking fringes. And it may be possible to avoid having to file a Form 990-T, Exempt Organization Business Income Tax Return, altogether.
For purposes of imputing UBTI under IRC Section 512(a)(7) for not-for-profit organizations, depreciation is not included in “total parking expenses.” Notice 2018-99 also offers a reasonable four-step methodology for determining the amount of UBTI resulting from the provision of employee parking.
The IRS also announced that it will provide estimated tax penalty relief in 2018 to some tax-exempt organizations that offer these benefits and were not required to file a Form 990-T in their prior filing season.