On December 22, 2017, President Trump signed H.R. 1 (Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act “TCJA”) into law, marking the most comprehensive change to the tax code since 1986. While the TCJA affects individuals and businesses large and small, new and unique obligations are also placed on the nonprofit community—including independent schools—in the unrelated business income tax (UBIT) area.
Independent schools may now owe a 21% tax for providing certain transit and parking benefits to their employees. This includes providing reserved or designated employee parking at the school itself. Under this law, schools must now engage in a complex process to tabulate the costs associated with maintaining their parking lot—pulling together the relative expenses of maintenance, snow and trash removal, staff time, insurance, property taxes, and other expenditures associated with the space; determine what proportion of the lot is reserved or used by employees versus students, visitors, and the general public; and then calculate the taxes owed.
This process may require schools to spend more money and time working with a CPA or other financial planning professional to determine whether any taxes are owed, in addition to the tax itself. Members of Congress have introduced several bills to repeal this tax, including H.R. 513, H.R. 1223, H.R. 1545, H.R. 3300, and S. 632.
Add your voice to the many others in the nonprofit community and urge your member of Congress to repeal the nonprofit parking tax.
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