The “Tax Cuts and Jobs Act” (TCJA) has a far-reaching impact to nonprofit entities that was not publicized until December 2018. Embedded in the TCJA were items regarding non-deductible parking fringes. In this verbiage, nonprofits were mentioned and on December 10, 2018 the IRS provided guidance to assess the impact on nonprofits that provide parking to its employees and the potential of unrelated business income (UBI) being generated on the value of the parking as a fringe. The IRS regulation states if you have employees you provide parking to as a fringe benefit, it is now taxable as UBI on a 990T (not deductible for profits OR nonprofits, and of course, a whole host of regulations on how you impute values if you don’t charge employees).

Factors to consider when determining the impact to your nonprofit and potential UBI are:

  • Do you rent or own your parking lot?
  • What is the cost of your parking lot per year if you “lease” it from others? If you own the lot, what costs do you incur yearly with your parking lot?
  • If you own the lot, do you rent to other entities? If so, what is the rental income and how many spots do you rent?
  • What is the total number of parking spaces you have, and what is the breakdown of the spaces between — visitor, handicapped, reserved, general public?
  • Do you charge your employees for parking? If so, how much? How many spots? Do you run the payments through payroll?

There are some exceptions from UBI which are analyzed once information such as above is obtained.


This regulation is retroactive beginning January 1, 2018. Fiscal years ending June 30, 2018 will need to be calculate the potential impact of UBI from January 1, 2018 through June 30, 2018. Calendar year nonprofits will analyze the UBI exposure for the entire 2018 year. See your Huth Thompson LLP nonprofit specialists for further information.