Momentum is building to repeal tax on nonprofit employee benefits.
asae and a coalition of other nonprofit groups are making headway in repealing an onerous tax on certain benefits that tax-exempt organizations provide to employees.
The unrelated business income tax on certain fringe benefits, like parking and mass transit assistance, was implemented as part of the 2017 Tax Cuts and Jobs Act. The tax is proving to be a huge burden for the nonprofit community, including churches and small charities that have little or no experience dealing with the IRS and have insufficient guidance on how to calculate the value of parking and other benefits provided to their employees. ASAE and the UBIT Coalition have been advocating for repeal for more than a year.
The coalition’s message is beginning to resonate, with multiple bills to repeal the tax already introduced in this Congress.
Reps. Mark Walker (R-NC) and Tom Suozzi (D-NY) introduced a repeal bill March 5. The bill is a companion to legislation in the Senate sponsored by Sens. James Lankford (R-OK) and Chris Coons (D-DE). House Majority Whip James Clyburn (D-SC) has also introduced repeal legislation this year.
In all likelihood, one of these bills will find its way into a broader tax package at some point this year. Lawmakers have expressed a desire to move another tax bill with technical corrections to the 2017 law, and that measure could be the vehicle for repeal of the fringe benefits tax.
“Bipartisan support is growing to repeal this onerous tax on nonprofit employee benefits,” said ASAE President and CEO John H. Graham IV, 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.”