As you counsel your nonprofit organization clients and individual clients who are board members of charities, it is important to stay on top of changes in the tax laws that pertain to exempt organizations. Most recently, on December 20, 2019, President Trump signed the Further Consolidated Appropriations Act 2020, H.R. 1865, which passed the House of Representatives by a vote of 297–120 and the Senate by a vote of 71–23. The law repeals Internal Revenue Code Section 512(a)(7). This provision was part of the Tax Cuts and Jobs Act. It required tax-exempt employers to pay unrelated business income tax (UBIT) on transportation fringe benefits, such as parking. The tax applied to the amount by which Section 274 did not allow a deduction. So, tax-exempt employers no longer need to pay UBIT tax on these fringe benefits.
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