Congress recently retroactively repealed IRC Section 512(a)(7), which was enacted by the Tax Cuts and Jobs Act of 2017 and increased unrelated business income tax (UBIT) by amounts paid or incurred for qualified transportation fringes. Because the provision was effective for amounts paid or incurred after Dec. 31, 2017, taxpayers subject to the tax paid it with their 2017 and 2018 returns. Now these taxpayers are entitled to a refund.
Special Procedures for Refund of Parking Tax Paid by Tax Exempts
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On Jan. 21, the IRS posted on its website special procedures for claiming refunds of amounts paid under repealed IRC Section 512(a)(7). Taxpayers seeking to claim a refund or credit of UBIT previously reported should file an amended Form 990-T, “Exempt Organization Business Income Tax Return.” These refund claims must be filed within the normal refund claim period of limitations (generally within three years of filing the return). There are numerous things for taxpayers to consider when filing amended 990-Ts, including the use of net operating losses and potential additional scrutiny of amended returns. As such, taxpayers should discuss specific concerns with their tax adviser.
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Rachel Spurlock
Managing Partner,
Exempt Organizations Tax Services; Office Managing Partner, Louisville