01/23/2020

IRS Issues Guidance on UBIT Refunds

This was a major victory for the UBIT Coalition

This week, the Internal Revenue Service (IRS) issued guidance for tax-exempt organizations on how they can claim refunds for taxes paid on parking and transportation benefits they provide to employees.

The 2017 tax law required associations and other nonprofit groups to pay a 21 percent unrelated business income tax (UBIT) on the value of these employee benefits. Sustained advocacy from ASAE and its UBIT Coalition, which includes OSAE, resulted in Congress repealing the tax in a year-end government spending bill last month. Repeal of the fringe benefits tax is retroactive for taxes that nonprofits have paid or accrued after Dec. 31, 2017. Repealing the nonprofit fringe benefits tax was ASAE’s top legislative priority for two years.

In response to lawmakers’ calls for the IRS to implement an expedited process for providing refunds to tax-exempt organizations, the agency posted guidance this week instructing nonprofit groups to file an amended Form 990-T return for taxes paid in 2017 and 2018 citing repeal of Section 512(a)(7) of the tax law. The IRS also notes that there are time limits on requesting refunds.

“Typically, these time limits are three years from the time the original Form 990-T was filed or two years from the time the tax was paid, whichever is later,” the IRS said.

This article was provided to OSAE by the Power of A and ASAE's Inroads.