NRB is calling on Congress to stop a new “parking tax” from being levied on churches and nonprofit ministries. In a letter to key Senate and House committee leaders, Dr. Jerry A. Johnson, president & CEO of NRB, joined a diverse coalition in calling for its repeal before the end of 2018.
Newly added Section 512(a)(7) of the tax code was a surprise provision in last year’s tax reform package. It imposes a 21 percent “unrelated business income tax” (UBIT) on employee parking and transportation benefits regardless of whether a group actually conducts such business activities. Observers estimate that this parking tax will cost charities $1.7 billion over 10 years.
“Unless repealed, this provision will require tens of thousands of houses of worship to file tax returns for the first time in our nation’s history and will impose a new tax burden on houses of worship and nonprofit organizations,” states the joint letter, which was spearheaded by the Southern Baptist Convention’s Ethics & Religious Liberty Commission.
Johnson and the other religious leaders highlighted not only financial, but also administrative burdens connected to this provision. The cost of accounting and legal help to comply with the new law is likely to “exceed the tax actually collected from nonprofit organizations,” they said.
The letter declares that perhaps the worst result of this egregious provision is that it “will hopelessly entangle the IRS with houses of worship, simply because these houses of worship allow their clergy to park in their parking lots.” They reminded the congressional leaders that there are important First Amendment reasons for not requiring churches to file tax returns with the federal government.
Of note, to help ministries stay up to date on this concerning and potentially confusing matter, the Evangelical Council for Financial Accountability (ECFA) has centralized information and news about it on its website. Among the materials available is a petition (signed this summer by NRB) that in part 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.
Learn more from ECFA on this matter here.
By Aaron Mercer, Vice President of Government Relations
Published: November 16, 2018