Refunds for Nonprofit Parking Tax Not Simple under New IRS Guidance

January 24, 2020

Mike Batts, CPA

With the recent retroactive repeal of the Nonprofit Parking Tax, we were hoping that the IRS would develop and apply a streamlined approach for nonprofit organizations to obtain refunds.

Unfortunately, that’s not the approach the IRS is taking.  Instead, the IRS recently published information on its website stating that in order to obtain a refund, an organization must file an amended Form 990-T for the applicable year(s).  The key sentence in the IRS guidance on its website reads:

If you wish to claim a refund or credit of the UBIT reported on your Form 990-T for 2017 or 2018 under Section 512(a)(7), you may do so by filing an amended Form 990-T as described in the form’s instructions…

The guidance proceeds to provide detailed instructions for preparing an amended return.

Some members of Congress had asked the IRS to expedite the refund process.  And while Congressional spokespeople have crowed in the media that the newly published IRS guidance is a direct response to their efforts, there is nothing expeditious about the requirement to amend a tax return to obtain a refund.  Amending a return to obtain a refund is a longstanding, standard requirement under federal tax law.

Sadly, in many cases, the cost to prepare and file an amended return (whether done by an organization’s staff or its external accountants) will equal or exceed the amount of the tax previously paid…which will cause many organizations to simply disregard the availability of a refund.

BMWL was hoping that the IRS would develop a streamlined approach to providing refunds automatically to organizations that had paid the tax…particularly where the Nonprofit Parking Tax was the only taxable item reported on a return.  At least for now, that does not appear to be the IRS’s plan.

For BMWL client organizations who wish to pursue a refund of the Nonprofit Parking Tax paid, we stand ready to assist, and will do so as efficiently as possible.

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