Congress Trying to Redress Challenges to Non-Profits Because of UBTI/UBIT – Second Bill Introduced

ANCOR is sharing this article by ASAE, of which we are members, because a 21 percent tax on fringe benefits (e.g. parking and transportation benefits) that became law through the 2017 tax reform bill is causing many challenges for providers of supports for people with disabilities due to the staff-heavy and community-based nature of these supports. ANCOR is following legislative efforts to address these challenges, including a different bill than the one mentioned below. ANCOR and its members also submitted comments last week directly to the Internal Revenue Service (IRS), which is responsible for implementing the rule. ANCOR will keep members informed of opportunities for action as they emerge.

As written by ASAE:

“Sen. James Lankford (R-OK) is expected to introduce legislation today to repeal a provision in the 2017 Tax Cuts and Jobs Act that assesses a 21 percent tax on the value of so-called fringe benefits – such as free parking or mass transit assistance – that nonprofits provide to employees. Sen. Chris Coons (D-DE) is a co-sponsor on the Lankford bill.

This tax is proving to be a huge burden for associations and other nonprofit groups, including churches and small charities that have little or no experience dealing with the IRS and insufficient guidance on how to calculate the value of parking and other benefits provided to their employees.

Momentum for repealing the tax on nonprofit employee benefits is growing on both sides of the aisle. House Majority Whip James Clyburn (D-SC) has introduced similar legislation in the House this month. Clyburn’s bill proposes to repeal the UBIT provision and pay for it with a .03 percent increase in the corporate tax rate.

“Bipartisan support is growing to repeal this onerous tax on nonprofit employee benefits,” said ASAE President and CEO John Graham, FASAE, CAE. “These new tax liabilities create numerous compliance challenges for nonprofits and threaten the financial security and missions of organizations that provide countless services to communities in need and to society as a whole.”