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House Passes Agreement to Repeal Tax on Nonprofit Parking, Transportation Fringe Benefits

AAFCPAs is excited to share with our nonprofit clients and their dedicated employees, on December 17, 2019, the House of Representatives passed an agreement (cited as the Taxpayer Certainty and Disaster Tax Relief Act of 2019, originally introduced in June 2019), which includes much welcomed provisions to repeal the tax on nonprofit transportation fringe benefits as well as a flat rate private foundation excise tax.

Repeal of Increase in Unrelated Business Income for Certain Fringe Benefit Expenses Paid

The bill retroactively rescinds the original Tax Cuts and Jobs Act’s provision increasing unrelated business income for nonprofits who provide fringe benefits under IRC Section 512(a)(7). It is clear, in the agreement passed by the House on December 17, 2019, that this provision is retroactively repealed, but no process has been defined for organizations to apply for refunds for amounts previously paid.

Change in Private Foundation Excise Tax

The bill also amends the excise tax rate for private foundations by striking the two percent rate and reduced one percent rate and inserting a flat 1.39% rate for all foundations, regardless of distributions. This change would apply to taxable years beginning after the date of enactment for the plan.

The language in the bill is not yet finalized and still needs to be signed into law. However, AAFCPAs advises clients affected by these or other provisions to begin planning now for the changes.

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As always, the tax practice of AAFCPAs will continue to monitor the legislative process and keep you informed as significant changes occur, or provisions become clarified. If you have any questions please contact: Christopher Consoletti, Esq. at 774.512.4180, cconsoletti@nullaafcpa.comJosh England, Esq., LLM at 774.512.4109, jengland@nullaafcpa.com; or your AAFCPAs Partner.

About the Authors

Chris Consoletti
Chris, in conjunction with AAFCPAs’ multi-disciplinary team of CPAs, investment & business advisors, provides effective tax planning and research, tax compliance, charitable planning, and asset protection solutions for trusts & estates, corporations and partnerships. Chris provides clients with corporate law analysis and recommendations related to entity formation, management and board structure, executive compensation, limited liability protection, and the applicable laws of relevant states and jurisdictions. He evaluates and assesses opportunities and risks associated with complicated tax challenges or controversies.
Joshua England, Tax Attorney
Josh is a tax strategist with extensive expertise advising high-net-worth individuals, nonprofits, and business owners and investors on effective strategies to ensure tax efficiency, asset protection, well-executed succession plans, and wealth preservation. He has been practicing law since 2000 and focuses his practice on the areas of wealth transfer planning, fiduciary and individual taxation, business structuring to maximize tax efficiency, and advising tax-exempt organizations, foundations and charitable donors.