Money & Business

UBIT Repeal Gaining Traction in 116th Congress

By / Feb 4, 2019 (AlbertPego/iStock/Getty Images Plus)

Bipartisan support to repeal a 21 percent tax on fringe benefits, including free parking and mass-transit assistance, is growing. Meanwhile, a new report commissioned by Independent Sector reveals the impact of the tax on nonprofits.

ASAE and other members of the UBIT Coalition continue to meet with congressional offices to seek repeal of a 21 percent tax on so-called fringe benefits—such as free parking or mass-transit assistance—that nonprofits provide to employees.

Just before the holidays, the House passed a tax package authored by Rep. Kevin Brady (R-TX) that would have repealed the transportation benefits tax, along with other tax changes. The Senate did not take that bill up before adjourning for the year, however, and House Democrats now control the agenda in the House.

ASAE and the UBIT Coalition are scheduling meetings with new members of the House Ways and Means Committee and the Senate Finance Committee to urge them to repeal the transportation benefits tax, which projects as a huge burden for associations and other nonprofit groups. Sen. James Lankford (R-OK), who is a new member of the Senate Finance Committee, introduced a UBIT repeal bill last year, and Rep. Brendan Boyle (D-PA) cosigned a UBIT repeal bill in the House.

“Bipartisan support to repeal this onerous tax on nonprofit employee benefits is growing,” said ASAE President and CEO John Graham, FASAE, CAE. “These new tax liabilities create numerous compliance challenges for nonprofits and threaten the financial security and missions of organizations that provide countless services to communities in need and to society as a whole.”

new report commissioned by Independent Sector reveals that the new tax will divert an average of $12,000 away from each nonprofit’s mission per year. About 10 percent of nonprofits are considering dropping transportation and parking benefits entirely, although these employer-provided benefits are mandated in some metropolitan areas like Washington, DC, New York, and San Francisco.

“These [UBIT] provisions divert precious funds away from missions and the communities who need it most,” said Daniel J. Cardinali, president and CEO of Independent Sector, in a press release. “We heard from nonprofit leaders who were concerned about the impact of these taxes and confused about how they were going to be implemented. We commissioned this research to educate the nonprofit community and urge Congress to quickly repeal these two provisions.”

Chris Vest, CAE

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