IRS Asked to Issue Guidance on UBIT Refunds

Ways and Means Democrats this week called on the Internal Revenue Service to issue guidance for tax-exempt organizations on how they can claim refunds for taxes paid on parking and transportation benefits they provide to employees.

While the 2017 tax law required associations and other nonprofit groups to pay a 21 percent unrelated business income tax (UBIT) on the value of these employee benefits, a two-year advocacy and grassroots campaign by ASAE and its UBIT Coalition resulted in Congress repealing the tax in a year-end government spending bill last month. Repeal of the fringe benefits tax is retroactive for taxes that nonprofits have paid or accrued after Dec. 31, 2017.

In a Jan. 8 letter  (opens in a new tab) [PDF] to the IRS, House Ways and Means Committee Chairman Richard Neal (D-MA) and Ways and Means Oversight Subcommittee Chairman John Lewis (D-GA) said that the tax was unfair to the tax-exempt community and sapped resources that nonprofit organizations need to carry out their tax-exempt missions.

“We respectfully request that the IRS implement an expedited process for providing refunds to these organizations, which do such critically important work for our communities,” Neal and Lewis said. “Additionally, we request that the IRS promptly issue guidance on the appropriate steps organizations should take in the refund process, so that they can receive the money they are owed without delay and further hardship.”

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