On January 21, the Internal Revenue Service (IRS) provided guidance on how nonprofits can claim a refund on the unrelated business income tax (UBIT) paid on qualified transportation fringe benefits.
Parking Tax Repeal
The Taxpayer Certainty and Disaster Tax Relief Act of 2019 retroactively repealed Internal Revenue Code (IRC) Section 512(a)(7), which increased UBIT by amounts paid or incurred for qualified transportation fringes. Congress had previously enacted this provision for amounts paid or incurred after December 31, 2017.
How to Claim the Refund
If you wish to claim a refund or credit, you may do so by filing an amended Form 990-T and do the following:
- Write “Amended Return” at the top of Form 990-T. If the amended return is being filed only to claim a refund, credit, or adjust information due to the repeal of Section 512(a)(7), write “Amended Return – Section 512(a)(7) Repeal.”
- Complete the Form 990-T as you originally did, but:
- For a 2017 Form 990-T
- Reduce the entry on the line on which you originally included the 512(a)(7) amount by that amount. This would have been on line 12 (Other income) if you followed the Recent Developments article originally posted to IRS.gov in filing the 2017 Form 990-T.
- Complete the rest of the Form 990-T based on that revised entry.
- Include on the “Other” sub-line of line 45g (Other credits and payments) the amount of tax from line 48 (Tax due) of the original return (if any).
- If your changes result in your having made an overpayment, you should enter that amount on line 49 (Overpayment) line of the amended return, which you may request as a refund or credit on line 50.
- For a 2018 Form 990-T
- Enter “0” (zero) on line 34 (Amounts paid for disallowed fringes).
- Complete the rest of the Form 990-T based on that revised entry.
- Include on the “Other” sub-line of line 50g (Other credits, adjustments, and payments) the amount of tax from line 53 (Tax due) of the original return (if any).
- If your changes result in your having made an overpayment, you should enter that amount on line 54 (Overpayment) line of the amended return, which you may request as a refund or credit on line 55.
3. Attach a statement indicating the line numbers on the original return that were changed and the reason for each change (for example, stating “repeal of Section 512(a)(7)”).
Statute of Limitations
Please keep in mind that the time limits for filing refund claims found in IRC Section 6511 apply to these refund claims. Typically, these time limits are three years from the time the original Form 990-T was filed or two years from the time the tax was paid, whichever is later.
If you need help claiming this refund or to request more information, please contact Chérie Williams at cwilliams@windes.com or at 844.4WINDES (844.494.6337).