Wednesday, December 5, 2018

Hey Fletch … Anything on your radar regarding 2018 tax law that is calling for non-profit organizations to file a 990-T for tax on parking spaces provided for employees? Our CPA has emphatically advised our board to file this by January 15 … however smoother groups appear to be more ambivalent. What’s the buzz about this?

DRF—The ECFA gives this overview of the problem: In a November 13 letter, ECFA President Dan Busby joined a diverse coalition of faith leaders in continuing to call upon Congress to step up and repeal the controversial “nonprofit parking tax.” The parking tax, introduced last year by the Tax Cuts and Jobs Act, is expected to cost charities $1.7 billion over 10 years. Despite the law taking effect on January 1, 2018, the Treasury still has not provided clear guidance to churches and nonprofits. “Unless repealed, this provision [Section 512(a)(7)] will require tens of thousands of houses of worship to file tax returns for the first time in our nation’s history and will impose a new tax burden on houses of worship and nonprofit organizations,” according to the statement. Additionally, the new law creates significant constitutional concerns surrounding government entanglement with churches “simply because these houses of worship allow their clergy to park in their parking lots.”

Dan Busby just sent me an email and said: “In the next two weeks, we will know if the nonprofit parking tax is repealed before the end of the year. If it isn’t repealed before December 31, there is a good chance it will be repealed early in 2019. Churches are left to decide whether to jump in and pay the tax or delay and hope for repeal.”

The Gospel Coalition wrote:

But if you’re a pastor or nonprofit leader who doesn’t know how to comply—or wasn’t even aware of the law—you’re not alone. According to Politico, groups like the Boys & Girls Clubs of America, Goodwill Industries, the YMCA, and the National Council of Nonprofits are demanding the tax at least be delayed, since the Treasury Department hasn’t even provided the details of how the tax will work.

Elaine and Frank Sommerville noted:

Many tax and legal professionals have questioned the implementation of the new law. All professionals agree that further guidance from the IRS is necessary to provide clarity. No one can predict the final IRS interpretation of the statute or when the IRS will interpret the statute. But because the law went into effect on January 1, 2018, tax-exempt organizations, including churches, must analyze the new law using traditional methods of analysis to determine a reasonable position on the application and breadth of the statute. They cannot wait for the IRS to issue guidance.

The bottom line:

  • The tax is the current law and you may need to file a return soon.
  • The tax need guidelines from the Treasury Department.
  • Wait as long as possible to pay the tax. See about any delay that you can reasonably implement for filing the return.