A major issue for associations and nonprofits is the 21-percent tax on parking and transit benefits they provide to employees. In meetings with Treasury officials in 2018, ASAE stressed that the new law disproportionately hurts tax-exempt employers by requiring them to pay a new UBIT on the value of these benefits.
The lack of guidance for tax-exempt entities in this area has also created a lot of confusion and conflicting opinions about how nonprofits should go about calculating their tax liability to comply with the requirement. Many organizations are already making estimated payments to the IRS on this expense—absent any guidance—which further supports ASAE’s request for a delay in implementing this requirement.
Additionally, some cities, including Washington, DC, New York, and San Francisco, have mandated that employers provide pre-tax mass transit benefits, so employers in those cities do not have the option of changing those benefits to avoid being taxed. ASAE has suggested that special consideration be given for employers in localities that mandate transportation benefits.