IRS Issues Guidance for Reclaiming Transportation UBIT Payments

January 24, 2020

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Wednesday, January 22, 2020, the IRS issued guidance that will help nonprofits quickly get back taxes paid on the now-repealed tax on nonprofit transportation benefits: How To Claim a Refund or Credit of Unrelated Business Income Tax (UBIT) or adjust Form 990-T for Qualified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