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PARKING TAX REPEALED AND PRIVATE FOUNDATION EXCISE TAX UPDATE

PARKING TAX REPEALED AND PRIVATE FOUNDATION EXCISE TAX UPDATE

On December 20, 2019 the “Parking Tax” was retroactively repealed when the new Taxpayer Certainty and Disaster Tax Relief Act was signed into law.

The “Parking Tax” or more technically, disqualified transportation fringes, became a component of unrelated business income (UBI) tax under the 2017 Tax Cuts and Jobs Act. The repeal of the “Parking Tax” is retroactive, so more or less, it is as if it had never existed. If an organization filed a 990-T for 2017 and/or 2018 and paid tax on disqualified transportation fringes; an amended return should be filed in order to claim a refund for any tax paid.

The IRS has provided specific guidance for this refund, including that the return should indicate “Amended Return – Section 512(a)(7) Repeal” at the top of the form. Further guidance can be found at the IRS website.

In addition to the repeal of the “Parking Tax” the new act also includes a provision to simplify the private foundation excise tax on investment income. Effective for years beginning after Dec. 20, 2019 there will be a flat 1.39% rate as opposed to the prior tired tax rates of 1% and 2%.

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