IRS Guidance Affects Employee Parking Expenses
UBIT arising from parking, transportation benefits is not subject to the “silo” rule
On August 21, the Internet Revenue Service (IRS) issued interim guidance on the provision in the new tax law that requires separate computation of unrelated business income tax (UBIT) for tax-exempt organizations with more than one unrelated trade or business.
ASAE and the UBIT Coalition have been asking for guidance from Treasury for months on this provision, along with another provision in the tax law that requires tax-exempt organizations to pay taxes on employee parking and transportation benefits.
Fortunately, the IRS guidance that came out this week, Notice 2018-67 [PDF], provides that UBIT arising from tax-exempt organizations’ parking and transportation benefits is not subject to the “silo” rule. Effectively, the guidance allows organizations engaged in more than one unrelated trade or business to net their parking and transportation expenses against any other UBIT income. This won’t help many charities, churches, and other 501(c)(3) groups that are paying UBIT for the first time under the new law, but it does provide some relief for associations with multiple unrelated business income activities.
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