Nonprofits are racing to repeal a new tax on parking benefits ahead of the April 15 tax-filing deadline, but the prospects for such action appear slim.
The issue could come up today at a hearing of the House ways and Means Committee about the 2017 tax law, which included a provision that requires nonprofits to pay a 21 percent excise tax on parking and other transportation benefits they provide to employees.
The National Council of Nonprofits submitted a statement saying “time is of the essence” to repeal a tax that will be “crippling” to some nonprofits.
“In urban areas, the application of the tax on train, bus, and ferry passes likely will force many organizations to scale back or eliminate the employee benefit,” the council wrote.
The tax also applies to parking benefits.
The council added that repealing the tax would hurt nonprofit efforts to recruit workers.
David Thompson, vice president for public policy at the council, called the tax on transportation benefits “nonsensical” in a statement released ahead of Wednesday’s congressional hearing.
“There is not a single representative or senator who thinks this tax on nonprofit transportation benefits should survive, yet it appears that this truly nonpartisan fix is being held hostage to political jockeying,” Thompson said.
In addition to the transportation tax, nonprofits are pushing to repeal a separate accounting provision created by the 2017 tax law that could add $15,000 in compliance costs per nonprofit, according to a recent study of 723 groups with a total of $9.5 billion in annual revenue.
3 Proposals
Elizabeth Boris, a co-author of the study and a fellow at the Urban Institute, said about 10 percent of nonprofits in the survey are considering dropping their transportation benefits as a result of the costs.
At least three bills that would repeal the transportation provision have been introduced in Congress since February this year, according to the Association for Commuter Transportation, including a bipartisan effort by North Carolina Republican Rep. Mark Walker and New York Democratic Rep. Tom Suozzi.
Advocates of repealing the transportation tax have focused on churches in particular in hopes of generating more bipartisan support. Last year Texas Republican Sen. Ted Cruz argued for a repeal, citing the impact on houses of worship.
“Churches and charities serve on the front line of our battle against the generational cycles of poverty and the traps of government dependence,” Walker said in a news release. “Washington should ensure their work in our communities is not restricted by unnecessary taxes and strenuous compliance processes.”
