Policy Update: Repeal of Nonprofit Transportation Tax
Nonprofit Connect wants to make you aware of changes to tax policy that affect the nonprofit community.
The tax on nonprofit transportation benefits has been retroactively repealed. Last week, bipartisan legislation that repeals the tax was passed by Congress, and the President signed the bill into effect Friday night.
The December 2017 tax law imposed an unrelated business income tax (UBIT) of 21 percent on the expenses that nonprofits incur for providing employee benefits like bus passes and employee parking. A study by Independent Sector estimated that the tax and associated administrative costs likely impacted organizations by an average of $12,000. Nonprofits and supporters have been fighting against the tax for two years, frustrated that taxing the tax exempt diverted funds away from their missions.
Nonprofits that paid the benefits-related unrelated business income tax will be entitled to a refund of the taxes paid, but not expenses incurred by organizations in calculating the tax. Refunds can be claimed by filing amended tax returns.
Legislation also passed that streamlines excise tax on foundations, and increases federal funding to many programs important to nonprofits.
In addition, we are watching the delayed sale of the .org registry, and preparing for the Overtime Final Rule to go into effect on January 1. We will keep you updated as changes develop.
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