Thursday, January 14, 2021
2020 was undoubtedly an unkind year to nonprofits in America, but there were at least a couple of positive developments for the industry: one of these was the IRS granting retroactive refunds for taxes nonprofit organizations paid for the “parking lot tax” which the legislature repealed in 2019. This tax, included in the 2017 Tax Cuts and Jobs Act, imposed a sizable unrelated business income tax on subsidized parking offered by these organizations to their employees. Many in the nonprofit industry objected to the parking lot tax on the grounds that it went too far in expanding the unrelated business income tax and placed an unfair burden on the often slim resources of nonprofit organizations. While the relevant legislation went into effect in 2019, the IRS has been issuing and updating guidance about getting a refund for parking lot taxes paid in prior years throughout 2020: for the IRS’s official statement, see https://www.irs.gov/forms-pubs/how-to-claim-a-refund-or-credit-of-unrelated-business-income-tax-ubit-or-adjust-form-990-t-for-qualified-transportation-fringe-amounts.
For additional reading on this topic see https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/irs-authorizes-parking-benefit-tax-refunds-for-nonprofits.aspx.
David Brennen, University of Kentucky College of Law