The Tax Cuts & Jobs Act (TCJA) enacted in 2017 had categorized amounts paid or incurred to provide employees with certain transportation benefits as unrelated business taxable income subject to tax on Form 990-T. This became commonly known as the “parking tax” required to be paid by some not-for-profit organizations. This “parking tax” has been retroactively repealed as of December 20, 2019, by the Taxpayer Certainty and Disaster Tax Relief Act of 2019. Any nonprofit organization who reported and subsequently paid the Parking Tax for 2017 and 2018 no longer owe this tax and are entitled to refunds of the amounts paid on Form 990-T. The IRS has yet to release news regarding how to claim the refund(s), but the information should be released soon.
Also enacted on December 20, 2019, is a change in the tax rate for a Private Foundation’s investment income. The two-tier system (1% and 2%) is now replaced by a flat rate of 1.39% on all Private Foundation’s excise taxes on investment income, effective for tax years beginning after December 20, 2019.