Unrelated Business Income Tax on Transportation Fringe Benefits Retroactively Repealed – Potential Refund Opportunity
Beginning in 2018, the unrelated business taxable income (“UBTI”) of tax-exempt organizations was increased by the amount an organization paid or incurred for any qualified transportation fringe benefits or any parking facility used in connection with qualified parking. As such, providing this benefit to your employees may have resulted in a tax filing obligation on a Form 990-T and a liability for UBIT.
Fortunately, the government funding bill passed on December 20, 2019 retroactively repealed this tax provision thereby eliminating the inclusion of qualified transportation fringe benefits when determining unrelated business income of tax-exempt organizations. Therefore, tax-exempt organizations that previously filed Form 990-T and paid UBIT under this tax provision should determine the best approach for obtaining a refund of any UBIT paid.