public-policy article

Action Needed on Transportation UBIT

February 25, 2019

Last year’s Tax Cuts and Jobs Act imposed a 21-percent unrelated business income tax (UBIT) on nonprofits for expenses they incur in providing their employees with transportation fringe benefits, such as parking and transit passes. The new tax went into effect January 1, 2019. There is bipartisan support for repealing this tax on tax-exempt organizations.

Bills pending in the 116th Congress, H.R. 1223 by House Majority Whip Clyburn (D-SC) and H.R. 513 by Representative Conaway (R-TX), would repeal the transportation tax for nonprofit organizations. A provision repealing the tax also was included in an end-of-year tax bill in 2018 that passed the House, but was not taken up in the Senate. The IRS issued guidance on December 10, 2018, for calculating parking expenses for unrelated business taxable income purposes and provided penalty relief to nonprofits. The guidance is incomplete, costly, and creates additional confusion for nonprofits. See the IRS News Release and National Council of Nonprofits summary.

For more information about how your organization can get involved, visit the National Council of Nonprofits’ take action page.