When the monumental Tax Cuts & Jobs Act was being considered last fall, many ministries were focused on the protection of the charitable tax deduction. However, another little-known provision in the tax reform package is now causing confusion and concern for nonprofit organizations. The Evangelical Council for Financial Accountability (ECFA) has determined that newly-added Section 512(a)(7) of the tax code will impose a 21 percent “unrelated business income tax” (UBIT) on employee parking and transportation benefits regardless of whether the group actually conducts such business activities.
Dan Busby, president of ECFA, has noted not only financial, but also administrative burdens connected to this provision. He told Christian Post that to file “a form 990-T that they've never even heard of” small churches are going to need costly professional help. “It's just a ridiculous provision that was put in the law," he said.
ECFA is gathering signatures on a petition that declares, “The idea that tax‐exempt organizations should be taxed on parking they provide to their employees is highly inappropriate and must be stopped.” The statement calls for congressional or regulatory action to nullify the new tax.
As of this writing, nearly 1,500 churches and ministries, including National Religious Broadcasters, had signed ECFA’s petition. More information about this new parking tax and the statement itself, which remains open for signatures, are available from ECFA here.
Notably, Rep. Michael Conaway (R-Texas) introduced legislation (H.R. 6037) in early June that would eliminate Section 512(a)(7), which authorizes this new tax.
By Aaron Mercer, Vice President of Government Relations
Published: June 29, 2018