Insights

IRS Clarifies How to Claim Refund of Nonprofit Transportation Fringe Benefit Tax

Now that the 21% tax on nonprofits for employer-provided transportation fringe benefits has been repealed retroactively, the IRS has issued guidance on how organizations that paid the tax in 2017 and 2018 on Form 990-T can get these tax dollars back.

Follow these steps to claim your organization's refund:
 
  • Write “Amended Return” at the top of a new Form 990-T. If the refund is the only purpose for the amended return(s), write “Amended Return – Section 512(a)(7) Repeal” instead.
  • Complete the Form 990-T as originally prepared.
  • On the line where the transportation fringe benefits were recorded, reduce the total amount by the transportation fringe benefits incurred in that year. If no other unrelated business income was reported on the original form, simply enter '0' on Line 12 (2017 form) or Line 34 (2018 form). 

Keep in mind that the statute of limitations for refund claims is typically three years from the time the original Form 990-T was filed or two years from the time the tax was paid. Nonprofits should also speak with their tax advisors to find out if they are entitled to a refund for state income taxes paid in the years that this federal excise tax was in effect.

For more information on claiming this tax refund or how this change affects your organization's 2019 Form 990-T, please contact your Grassi Not-for-Profit advisor or David Rottkamp, Not-for-Profit Practice Leader, at 212.223.5046 or drottkamp@grassicpas.com.
 

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