Monday, July 8, 2019
Emily Litella (played by Gilda Ratner) was cranky old woman who always showed up to complain about something on the Weekend Update in the early years of Saturday Night Live. In every case, she was complaining about something she failed to hear correctly – she couldn’t understand, for example, why everyone was so upset about violins on television. When informed that people were, in fact, upset about violence on television, she would pause and then just say, “Oh, Never Mind.”
Congress clearly didn’t hear all the complaints about the parking tax way back when (or about any other part of the TCJA for that matter: “The Games They Will Play,” anyone?) Now in the face of complaints from the nonprofit sector, the House Ways and Means Committee had a “Never Mind” moment with the parking tax in the extenders package that passed out of committee at the end of June. According to The Hill, the bill retroactively repeals the parking tax and extends some other tax provisions, notably the EITC, the child tax credit. and the dependent care credit.
For those of you not following the parking tax in excruciating detail, Section 132(f) excludes qualified transportation fringes (QTFs) from income for an employee BUT new Section 274(a)(4) prohibits a Section 162 deduction for “the expense of providing” a QTF, regardless of the fair market value of the fringe. Because nonprofits don’t care about deductions, new Section 512(a)(7) imposes the UBIT on non-deductible expenses under Section 274. (Which totally puts nonprofits and for-profits on the same footing, right? Right?)
Probably the most common QTF is the qualified parking fringe under Section 132(f)(1)(C). The cost of providing a parking QTF is relatively simple if you are paying a third-party vendor for a parking space for an employee. But for a hospital that runs a parking garage, it isn’t so easy. For a university that has many different parking facilities, some of which are open to the public, it’s even more difficult. A quick perusal of Notice 2018-99 demonstrates just how much of an administrative nightmare it can be; my sister, who is a tax accountant for a state university, backs that up anecdotally. And that’s the tale for large organizations that have the accounting resources to deal with such things – consider the burden for a small organization with a part-time bookkeeper and a pro bono accountant.
Although The Hill reports that Republicans support the parking tax repeal, they opposed the other tax provisions, citing the uncertainty to taxpayers. In addition, the bill seems to be short on revenue offsets, which may cause political issues with a variety of legislator, so the future of this bill may be uncertain.