One Step Closer to Repeal of Tax on Certain Employee Transportation Fringe Benefits

The U.S. House of Representatives and U.S. Senate passed a tax bill which includes the retroactive repeal of the unrelated business income tax on certain employee transportation fringe benefits. The legislation had bipartisan support and was sent to the president to be signed into law.

As we discussed in our previous not-for-profit tax articles, the Tax Cuts and Jobs Act of 2017 (TCJA) created an unrelated business income tax on certain employee transportation fringe benefits of tax-exempt organizations. These benefits included employer-provided parking, parking passes, transit passes, bus or rail passes, van pools, and similar payments or reimbursements to cover an employee’s normal commuting expenses.

To say the unrelated business income tax on certain employee fringe benefits was not well received by the tax-exempt community would be an understatement. Almost immediately from the time the TCJA was signed into law, tax-exempt organizations and their advisors have been calling for the repeal of this provision. Now two years later, it appears retroactive repeal is close.

As always, we will keep you up-to-date on this matter as additional information and guidance is provided.