IRS Issues Guidance for Reclaiming Transportation UBIT Payments

On Wednesday, January 22, 2020, the IRS issued guidance that will help nonprofits quickly get back taxes paid on the now-repealed tax on nonprofit transportation benefits: How To Claim a Refund or Credit of Unrelated Business Income Tax (UBIT) or adjust Form 990-T for Qualified Transportation Fringe Amounts.

As the Minnesota Council of Nonprofits reported earlier, on December 20, President Trump signed into law H.R. 1865, a package of funding and tax provisions that includes the repeal of a tax on nonprofit employee transportation benefits that was written into federal law in 2017.

Earlier this month, House Ways and Means Committee Chair Neal (D-MA) and Oversight Subcommittee Chair Lewis (D-GA) sent a letter to the IRS Commissioner asking the Service to create an expedited process so nonprofits can quickly secure refunds. The news release stated: “Congress did our part to right this wrong – now it is time for the IRS to provide tax-exempt organizations with the guidance they need to claim and receive the refunds they are due.”

The guidance that came out instructs nonprofits to fill amended Form 990-Ts and write at the top “Amended Return – Section 512(a)(7) Repeal” so IRS officials will know what it is and what to do with it. As is the case whenever dealing with tax forms, it is a bit more complicated than that. But it’s important that the IRS is alerting nonprofits and their own staff to the need for speed on this.