Repeal of Nonprofit Unrelated Business Income Tax on Fringe Benefits

President Trump is expected to sign a government funding bill tonight, Friday, December 20th, which includes a provision that will repeal the tax nonprofit organizations pay on certain qualified fringe benefits.

Included in the Tax Cuts and Jobs Act of 2017 was a provision that had a significant impact on certain tax-exempt organizations that provided qualified transportation fringe benefits. It required these organizations to pay an “unrelated business income tax” (UBIT) on the cost of benefits provided that were not deductible under IRC section 274. This applied to all transportation fringe benefits paid or incurred after December 31, 2017.

The repeal of the UBIT on transportation fringe benefits is expected to be retroactive to December 31, 2017 so 990-T filers can expect refunds for UBIT paid relating to fringe benefits.

At Buchbinder, our professionals are investing significant time in monitoring developments in the nonprofit sector. When it comes to your accounting needs and financial security, we have you covered and are here to answer your questions.

Author: Angela Juvelis, Senior Audit Manager

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