As of Dec. 19, 2019, both the House of Representatives and the Senate passed H.R. 1865, the ‘Further Consolidated Appropriations Act of 2020,’ which includes eight appropriations bills and numerous tax provisions. President Trump is expected to sign this act into law no later than Dec. 20, 2019.
H.R. 1865 includes two major provisions affecting tax-exempt organizations: a repeal of the income tax on qualified transportation fringe benefits (the ‘Parking Tax’) and a simplification of the private foundation excise tax on net investment income.
The legislation repeals section 512(a)(7), which taxes as unrelated business taxable income any amounts paid for qualified transportation fringe benefits, including expenses related to parking facilities used in connection with qualified parking. The repeal is retroactive to the original date of enactment. Taxpayers may file amended Forms 990-T to claim a refund for taxes paid related to expenses paid or incurred after Dec. 31, 2017.
Private foundation net investment income excise tax rates
The legislation also changes the section 4940 private foundation excise tax on net investment income to a single 1.39% rate and eliminates the dual tax rate regime of 1% or 2%, determined annually and dependent upon the private foundation’s distributions for charitable purposes. The single rate will be effective for tax years beginning after the legislation’s date of enactment.