Important fringe benefit changes for exempt organizations
WHITE PAPER |
Under the new provision enacted with the passing of the Tax Cuts and Jobs Act (TCJA), unrelated business taxable income includes any expenses paid or incurred by a tax-exempt organization for qualified transportation fringe benefits (as defined in section 132(f)), a parking facility used in connection with qualified parking (as defined in section 132(f)(5)(C)), or any on-premises athletic facility (as defined in section 132(j)(4)(B)), provided such amounts are not deductible under section 274. The effective date of this provision, is for amounts paid or incurred after Dec. 31, 2017.
The changes detailed in the white paper, Increases to unrelated business taxable income by amount of certain fringe benefit expenses for which deduction is disallowed, are applicable currently with respect to the specified fringe benefits and requires immediate review by exempt organizations. These changes may result in an exempt organization taking immediate action to change, modify or suspend affected fringe benefits. Alternatively, some tax-exempt organizations may elect to continue providing these affected fringe benefits to employees and accept the resulting tax liability as an additional cost of providing the benefit.