Parking Tax: Circa 2025 and other goodies

To start out on a positive note, there are a few good things in the 2025 “The One, Big, Beautiful Bill.”

• The threshold for required reporting (Form 1099-NEC) for independent contractors would rise to $2,000 from the long-time $600.  In the future, the threshold would be indexed for inflation. (Sec. 111105)

• The Section 127 exclusion for Employer-provided education would be indexed for inflation from the current $5,250. (Sec. 110113)

• Also under Sec. 110113, the employer payments of student loans under educational assistance programs would be made permanent.

Okay.  But remember the “Parking Tax” that was spawned by the 2017 Tax Cuts and Jobs Act?  (If you are like me, you do not want to remember!)  You mean to tell me that American Not-for-profits must pay a tax on the (estimated/imputed/fabricated) “value” of parking spaces that they provide for their employees?  Yup!

Section 112024 in the latest version of the O.B.B.B. states:

“Sec. 112024. Unrelated business taxable income increased by amount of certain fringe benefit expenses for which deduction is disallowed.

Current Law: Under current law, the amount paid or incurred for any qualified transportation fringe benefit is exempt from unrelated business taxable income.

Provision: This provision amends IRC section 512 to increase the unrelated business taxable income of a tax-exempt organization by including the amount paid or incurred for any qualified transportation fringe benefit.”

Sound familiar?  This is the same verbiage from the bill that created the 2017 TCJA. 

That gave us the burdensome, discriminatory, wasteful, and confusing I.R.C. Section 512(a)(7) and we had to wrestle with an onerous and nebulous task that caused the hijacking of massive amounts of resources (not only dollars) from hard-working American not-for-profits.

After almost two years of blood, sweat, tears, and confusion, Congress repealed the “Parking Tax” in December 2019 (The Taxpayer Certainty and Disaster Tax Relief Act of 2019). 

What can we do today?? 

We can pray! And remember that none of this is actual law YET!

Written byDavid C. Moja, CPA www.mojacompany.comThe information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.