IRS Offers Safe Harbor For Nonprofit Parking Benefits

IRS Offers Safe Harbor For Nonprofit Parking Benefits

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Meanwhile, the National Council of Nonprofits in late November urged members of Congress to repeal Section 512(a)(7) because the rationale behind it — to achieve parity between for-profits and nonprofits — is flawed.

David L. Thompson, who is the vice president of public policy at National Council of Nonprofits, told Law360 that anyone who thinks it was appropriate to repeal Section 512(a)(7) now has absolute proof that it’s the right solution after the IRS’ notice today.

“In a law intended to create tax simplification, this notice explains how to apply the section by requiring nonprofits of all sizes to follow a four-step calculus that will vary for each organization, and can vary from month to month,” he said. “The notice provides minimal instruction, relieves some organizations of penalties that result from the IRS’s own delay, and completely ignores the imposition of the new taxes on transit benefits, benefits that are mandated for some employers in various cities.”


On Monday Brady updated the text of H.R. 88, which still includes the repeal of Section 512(a)(7) but also repeals a long-standing provision called the Johnson Amendment, a provision in the tax code that protects Internal Revenue Code Section 501(c)(3) nonprofits by ensuring they do not endorse or oppose political candidates.

Thompson said that the only reasonable response is to repeal Section 512(a)(7) and said that even the chairman of the House Ways and Means Committee is requesting its repeal, which shows there is no congressional support to tax transportation benefits at nonprofits.

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