February 17, 2020

February 17, 2020

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New Law Repeals Parking Tax for Tax-Exempt Organizations

Good news for tax-exempt organizations!  The “Further Consolidated Appropriations Act, 2020” (H.R. 1865 — 116th Congress (2019-2020)) (the “Act”) signed into law on December 20, 2019, retroactively repealed Section 512(a)(7) of the Internal Revenue Code of 1986, often referred to as the “parking tax.”

Section 512(a)(7) was enacted under the Tax Cuts and Jobs Act of 2017 and generally required tax-exempt organizations to include as unrelated business taxable income amounts paid for employee parking and/or qualified transportation fringe benefits (e.g., transit passes).  Section 512(a)(7) was widely criticized not only for the tax and administrative burden it imposed on tax-exempt organizations, but also for its lack of clarity and uncertain application.

Because the Act retroactively repealed Section 512(a)(7), tax-exempt organizations may be entitled to file an amended Internal Revenue Service Form 990-T to claim a refund for any parking taxes paid.

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About this Author

Brian P. Teaff, Business Transaction Attorney, Bracewell Law Firm
Partner

Brian Teaff has a multifaceted tax practice, advising clients in connection with tax-exempt financings and other business transactions in the public finance area, as well as counseling public charities and private foundations on a wide range of tax planning and compliance matters. In addition, Brian advises a variety of types of clients with respect to the "opportunity zone" provisions enacted under the Tax Cuts and Jobs Act of 2017. 

In his public finance practice, Brian serves as tax counsel on governmental and conduit financings where he...

713-221-1367
R. Todd Greenwalt, Tax Attorney, Bracewell Law Firm
Partner

Todd's practice focuses on governmental entities and tax-exempt organizations, advising clients with regard to tax-exempt financings and other business transactions, and resolving tax-exempt status issues.

His clients include all types of state and local governmental entities, hospitals, other health care organizations, colleges and universities, charter schools, museums, arts organizations, community and economic development organizations, private foundations, advocacy groups, and other charities. Todd serves as bond counsel and advises health care systems on the development of accountable care organizations, physician recruitment programs and joint ventures in compliance with IRS guidelines. He works with governmental entities and tax-exempt organizations to develop compliance procedures, including procedures for post-issuance compliance for tax-exempt financings.

713-221-1138