Repeal of tax on Not-for-Profits for Transportation Fringe Benefits

Pursuant to new legislation, Section 512(a)(7) was repealed retroactive to the date of its enactment. As you may recall, Section 512(a)(7) became effective pursuant to the provisions of the “Tax Cuts and Jobs Act” passed in December 2017. The Section required not-for-profit organizations to increase their unrelated business income taxable income by amounts paid or incurred for qualified transportation fringe benefits provided to employees and this unrelated business taxable income was taxed at 21 percent.

The IRS recently posted on their website that organizations seeking refunds or credits for the income reported on their Forms 990-T for 2017 and 2018 under Section 512(a)(7) should file an amended Form 990-T, “Exempt Organization Business Income Return.”

Filers should write “Amended Return” at the top of their form. If the amended return is filed solely to claim a refund or credit or to adjust information because of the repeal of Section 512(a)(7), organizations should write, “Amended Return — Section 512(a)(7) Repeal,” the IRS said. Organizations should them complete the returns as they originally did except for some changes explained in detail on the IRS website.

Please contact Jones and Kolb’s Not-for-Profit service team and we can assist you with amended the tax returns to expedite your refund as well as answer any additional questions you may have.

~Brian Muia, Shareholder btm@joneskolb.com