Unrelated Business Income Tax (UBIT) Developments

September 10, 2019

On June 20, 2019, the House of Representatives Committee on Ways and Means passed the Economic Mobility Act of 2019 (EMA), which among many other things includes a provision to roll back the unrelated business income tax on nonprofits for transportation benefits provided to their employees.

The tax was originally included in the Tax Cuts and Jobs Act (TCJA), effective January 1, 2018, which imposed a 21% tax on these qualified transportation benefits that Nonprofit organizations were providing to their employees (owned or leased parking, transit passes, bus passes, etc..). The EMA, as currently written, would retroactively repeal the tax as if it were never imposed but currently does not mention how or if it will refund Nonprofit organizations who have been complying with the TCJA since inception.

This tax has caused a significant burden to Nonprofit organizations to not only create processes in order to comply with the TCJA but has also diverted much needed financial resources from their ever-important missions’. The EMA still needs to be approved by the House of Representatives, the United States Senate, and signed into law by the President but this is a strong first step in what will hopefully repeal this unnecessary tax.

We here at Daniel Dennis & Company LLP, have been diligently monitoring these developments and are happy to provide any additional information and resources as it relates to how this may impact your organization now and in the future. Please contact us for more information.