OSD Provides Guidance for MA UFR Filers on Reimbursement of Nonprofit Transportation Tax

Posted on May 6, 2019September 9, 2021

AAFCPAs would like to make clients who file a Massachusetts UFR aware that we sought and received guidance from the Massachusetts Operational Services Division (OSD) regarding how unrelated business income tax (UBIT) associated with the provision of transportation benefits to employees would need to be treated for UFR reporting purposes.
In response, OSD clarified that the taxes generated on the “income” (as required by the Tax Cuts and Jobs Act) would be treated as non-reimbursable or disallowed costs for the purposes of the annual UFR submission. As such, 29% (21% Federal, 8% Massachusetts) of the total cost of benefits provided to employees will be reflected as a non-reimbursable cost in the UFR.

What do we advise?

UFR filers should proactively determine the amount of “income” and taxes associated with provision of transportation benefits for its fiscal year. These amounts will need to be allocated amongst programs and supporting functions on the UFR in a manner consistent with other employee benefits. Additionally, filers should determine the source of eligible revenue offsets that will be used to “fund” these non-reimbursable expenditures.

AAFCPAs Urges Repeal of Nonprofit Transportation Tax

AAFCPAs has sent a letter to Congressman Richard Neal (D-Mass.), Chair of the tax-writing Ways and Means Committee, asking him to lend his support to nonprofits by helping to repeal Internal Revenue Code Section 512(a)(7). Section 512(a)(7) of the new tax code requires nonprofits to now pay a burdensome tax on parking and transportation fringe benefits provided to employees. You may read the complete letter here.>>
If you have questions, please contact Tom Muldoon, CPA, CGMA at 774.512.4032, tmuldoon@nullaafcpa.com; or your AAFCPAs Partner.

About the Author

Thomas Muldoon, CPA, CGMA

Tom specializes in providing assurance, tax, and business consulting services to sophisticated nonprofit organizations, including: multi-service human & social service organizations, early education and care (EEC) agencies, independent schools, Massachusetts Chapter 766 schools, and higher education institutions. Tom specializes in audits in accordance with generally accepted auditing standards, Government Auditing Standards, Uniform Guidance and program-specific audits, as well as the Massachusetts Uniform Financial Report (UFR). Tom is a member of AAFCPAs’ Revenue Recognition Task Force, providing consulting solutions to clients for the efficient and effective implementation of the new ASU, including: assessing the impact of the new standards, and guidance throughout the transition process.