An End to the Upside Down World of Taxing Expenses?

Recent developments in Washington are providing hope that exempt organizations might be getting a surprise holiday present.  Lawmakers and administration officials announced that they reached an agreement on a bill extending many expired and expiring tax provisions.  In addition to extenders, the legislation has a provision to repeal Code §512(a)(7), which taxes qualified transportation fringe benefits.

Since January 1, 2018, exempt organizations have been subject to a tax on the amount of parking expense that is attributable to employee parking--an income tax on an expense.  There was also tax on the expense incurred in bus passes provided to employees.  Needless to say, this tax has been very burdensome and costly to exempt organizations.  Numerous pieces of legislation have been proposed to eliminate this tax, but nothing has come close to passing.

According to reports, the Taxpayer Certainty and Disaster Tax Relief Act of 2019, has passed the House on Tuesday afternoon and is in place to pass the Senate and be signed into law on Friday by the President.  The draft legislation indicates that Code §512(a)(7) will be struck as of the date of the Tax Cuts and Jobs Act.  The result would seem to be that any tax paid as the result of this code section would be refundable.  Certainly, no information is available on how this would be accomplished.

If you have any questions on the Parking Tax and its tentative demise, please contact any of our exempt organization experts.  We will post further updates as they become available.    

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
CARES Act, Tax BY Austin Nace
Disappointing News for Employers: Employee Retention Credit Ends Before Fourth Quarter of 2021
Build Back Better Tax Legislation Update – International Tax Changes
Welcome News for the Trucking Industry - Clarification of 100% Meals and Entertainment Deduction for Per Diems
Higher Estate Tax Exemption Amount for 2022
Michael Jackson vs. Kenny Pickett
Tax Reform 2021 - Build Back Better: Proposed Changes to Section 199A Qualified Business Income Deduction
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×