Part of the government funding legislation that the President recently signed into law included a provision repealing Section 512(a) (7), commonly referred to as “the parking tax.” The repeal of the parking tax was included in the ‘Further Consolidated Appropriations Act of 2020,’ which contained a number of tax provisions.

Section 512(a) (7) was originally enacted as part of the 2017 Tax Cuts and Jobs Act. It required tax-exempt employers to include as unrelated business taxable income amounts paid for qualified transportation fringe benefits provided to employees, including expenses related to parking facilities used in connection with qualified parking. The provision caused concern among tax-exempt organizations because of the prospect of increased tax liability and the administrative burden of complying with the law.

Section 512(a) (7) has been repealed retroactive to the original date of enactment. Organizations that had paid the tax may file an amended Form 990-T to claim a refund of taxes paid related to such qualified transportation fringe benefits.

If you have questions related to this law change or any of the recent tax law changes contact us at Huth Thompson.