UCC General Counsel, Heather Kimmel, has received word that because of the tax law changes of 2017, churches with parking lots may need to file an extra form to the IRS this year. Their recent tax-code rewrite requires churches, hospitals, colleges, orchestras and other historically tax-exempt organizations to begin paying a 21 percent tax on some types of fringe benefits they provide their employees. The main benefits affected are transportation-related, like free parking in a lot or a garage and subway and bus passes. It also targets meals provided to workers and, in some circumstances, may affect gym memberships.
Ms. Kimmel has written an article (available from the Conference Office) that discusses changes to the tax law on fringe benefits for tax-exempt organizations that are a result of the 2017 tax cut law. We will spare you many of the details, but the upshot is that tax-exempt organizations that provide parking, or qualified parking benefits, may be subject to UBIT, or Unrelated Business Income Tax because of this. This will require many organizations to file a Form 990-T (UBIT return) when they ordinarily would be exempt from it. Because the IRS has not issued guidance on these provisions, it is difficult to say what the correct process will be for exempt organizations, especially since all of them may handle parking in different manners (some own the lot, some may rent a lot, some may pay for employees to park at a lot).
At this point we urge congregations to get the advice of a CPA or tax attorney on what the ramifications may be and whether a Form 990-T will be required, even if you own your parking lot.
If you want to read the full article, please contact Marie Bacchiocchi.