Repeal of Parking Tax Opens the Door for Refunds – Sector Leadership SpotJanuary 17, 2020
By Cynthia Lewin, Venable LLP
As a board member of PurchasingPoint®, the National Assembly’s discount group purchasing program, I know how every dollar counts at most nonprofits. For that reason, I’m delighted to share that nonprofits received a lovely gift right before Christmas with the repeal of the notorious nonprofit parking and public transit tax on December 20. What’s more, the repeal is retroactive, as if the tax had never been enacted, meaning that nonprofits that paid the tax in 2018 and 2019 should be able to seek refunds from the IRS.
The so-called “parking tax,” enacted in December 2017, required nonprofit employers to pay a 21% tax on parking and transit benefits made available to their employees, even if the employees paid for those benefits themselves through pretax salary reduction, and even if local laws mandated that employers provide for pretax transportation benefits. Thus, many nonprofits were hit with large and unexpected tax bills in 2018 and 2019.
Nonprofits should be able to seek return of those funds now, leading to a nice unbudgeted windfall in 2020. It seems likely that the IRS will release additional guidance on refunds shortly. Happy new year!