Tracy Teale, CPA, Audit Partner and San Francisco Office Head.
Tracy TealeCPA / CFO / A&A Department Head / San Francisco Office Headview bio

Non-Profit Tax Corner


The Not-For-Profit "Parking Tax" Repealed Retroactively

In December, 2019 Congress changed its mind about taxing not-for-profits on the expense the organization incurs when it pays for certain fringe benefits. This "parking tax" on tax-exempt organizations was adopted by Congress in 2017, and it was immediately controversial and unpopular.  The benefits included in this tax were for any qualified transportation fringe, any parking facility used in connection with qualified parking, or any on-premises athletic facility.

Congress listened. Not only did Congress repeal the  tax law late last year, it made the repeal retroactive to the tax's original effective date.  \

This means that if a tax-exempt organization reported tax for employee benefits on a Form 990-T in the past two years and remitted the required tax, the organization is due a refund. The process of claiming the refund has not been determined by the IRS, but clients who paid the parking tax should be alert for future details on getting their money back!

Tax rates for private foundations simplified

The 2019 Act also simplifies the private foundation excise tax on investment income by replacing the two-tier system (1% and 2%) with a flat rate of 1.39%. The new rate is effective for tax years beginning after December 20, 2019.

Non profits will soon have to electronically file all returns

The Taxpayer First Act (H.R. 3151), signed into law on July 1, 2019, will soon require all tax-exempt organizations to electronically file their annual Forms 990, 990-PF, 990-EZ, and 990-T.  

Loss of tax-exempt status procedures changed

Currently a non profit who fails to file for two consecutive years automatically loses its tax-exept status and an organization must refile for exempt status.  A provision in the Taxpayer First Act requires the IRS to notify the organization after the second consecutive failure to file and allow the organization the opportunity to file the missing returns and prevent tax-exempt status from being revolked.

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