New Tax on Transportation and Parking Benefits is Problematic for Nonprofits

New Tax on Transportation and Parking Benefits is Problematic for Nonprofits

An under-the-radar provision in the Tax Cuts and Jobs Act that was passed and signed into law in December 2017 imposes a new tax on nonprofits that provide transportation and parking benefits to their employees. Nonprofits that provide these benefits to their employees are now required to pay unrelated business income tax (UBIT) on these expenses and must file Form 990-T with the IRS.

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Take action on tax reform

Now that the U.S. Senate has passed tax reform plan (see details below), House and Senate leaders are negotiating a final version of the bill that they hope to send to the President for his signature as soon as this Friday. While both the House and Senate plans include a variety of tax changes that are problematic for nonprofits (plus a few small changes that might benefit nonprofits), there is a big difference between the two plans.

TABOR

Charitable nonprofits across North Carolina are concerned that the Taxpayer Protection Act (also known as TABOR) would harm nonprofits that provide essential services in every community in our state.  If TABOR (S.607) passed as a constitutional amendment, it would likely lead to new taxes, fewer private contributions, and increased burdens on charitable nonprofits.

House Passes Bill to Help Small Businesses Give to Nonprofits

The N.C. House of Representatives recently passed a bill recommended by the N.C. Center for Nonprofits. This will make it easier for North Carolina small businesses to give to nonprofits. Currently, North Carolina companies that give generously to nonprofits don’t get full credit for their charitable contributions on their state taxes. The bill (H.B. 886) would make the N.C. corporate tax deduction for the same as the federal deduction. Thanks to Rep. Tim Moffitt (R-Buncombe), Rep.