Mnuchin suggests further action on parking tax up to Congress

Mnuchin suggests further action on parking tax up to Congress

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Based on Mnuchin's and Brady's comments, and House Speaker Nancy Pelosi's recent statement that Democrats will take their time on fixes to the 2017 tax law, Thompson said he's not optimistic repeal will happen anytime soon.

"Repeal of this tax on tax-exempts is being held hostage to partisan bickering and denial of reality," he said. "Nonprofits are mobilizing to overcome this business-as-usual attitude, so we can go back to our focus on the public good."

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Suburban churches were concerned about the tax because of their large parking lots, but most won't face any tax liability because the IRS treats those lots as "free public parking with only incidental employee use," Thompson said. Those suburban churches are likely the constituents Brady has heard from the most on the issue, he said.

"The IRS guidance, however, only applies to calculating potential tax liability for free parking on employer property," he said. "The guidance doesn't address, and the tax clearly applies to, paid parking in commercial lots and employer and employee-withheld (pre-tax) payments for transit, subway, bus, and ferry passes."

Furthermore, Thompson said, the separate notice providing temporary relief applied only to nonprofits that didn't file unrelated business income tax returns in 2017, and that relief now has expired.

For most nonprofits operating on a calendar year basis, taxes for 2018 transportation benefits are due on May 15 but quarterly estimated tax payments for 2019 are due April 15, he said. Organizations that haven't already done so are now hiring accountants to calculate their possible liability, including those with transportation-related expenses below the $1,000 threshold, he said.

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MLEX US Tax Watch
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