United States

IRS issues refund guidance to exempt organizations on "parking tax"

TAX ALERT  | 

The IRS recently issued guidance for tax-exempt organizations filing amended Forms 990-T to claim a refund or credit of unrelated business income taxes paid for tax years 2017 and 2018 as a result of qualified transportation fringe benefit expenses under section 512(a)(7). The Taxpayer Certainty and Disaster Tax Relief Act of 2019 retroactively repealed section 512(a)(7), previously enacted for amounts paid or incurred after Dec. 31, 2017.

To claim a refund or credit of the tax reported on Form(s) 990-T for 2017 or 2018 under section 512(a)(7), the IRS states that organizations should file Amended Form(s) 990-T, taking the following steps:

  1. Notate at the top of the Form 990-T, Page 1 that it is an amended return:
    • If the only change is due to the repeal of section 512(a)(7), write “Amended Return – Section 512(a)(7) Repeal.”
    • If there are other changes in addition to the section 512(a)(7) repeal, write “Amended Return.”
  2. Complete the Amended Form 990-T based on revised amounts
    • 2017 Form 990-T (fiscal year filers only)
      • Remove the amount reported for section 512(a)(7) income from the line on which it was originally reported (commonly Line 12, Other Income)
      • 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 applicable)
      • If the changes result in an overpayment, enter that amount on Line 49 (Overpayment) of the amended return, and request as a refund or credit on Line 50
    • 2018 Form 990-T:
      • Enter zero on Line 34 (Amounts paid for disallowed fringes)
      • 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 applicable)
      • If the changes result in an overpayment, enter that amount on Line 54 (Overpayment) of the amended return, and request as a refund or credit on Line 55
  3. Attach a statement to the amended return indicating the line numbers on the original return that were changed and the reason for each change (for example, “repeal of Section 512(a)(7)”)

The sector continues to wait to see if the IRS will issue additional streamlined guidance, particularly to claim refunds for estimates paid as a result of section 512(a)(7).

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