Earlier this week, the IRS issued new guidance for determining a tax on fringe benefits offered by nonprofits, but Agudath Israel and other nonprofits want the entire tax eliminated.
Rabbi Abba Cohen, Agudath Israel’s Vice President for Federal Government Affairs was quoted in the Jewish Week and Jewish Insider explaining the organization’s opposition to the tax and support for an effort to repeal it in its entirety.
“The added tax is not only a dollars and cents burden, but it’s also an administrative one. It is especially painful because we’re living in a time where, as the government pulls back from providing services to certain communities, they are expecting nonprofits, including religious institutions, to step up to fill that gap,” he explained. “Now’s the time where the government should be supporting these institutions and making it easier for them and giving them the resources to do it, rather than cutting back on their resources.”
“The other issue is that that this is an unprecedented tax on religious institutions,” Cohen asserted. “One of the basic fundamentals of tax law has been to maintain the independence of religious institutions and not have them be entangled with government intrusion. There have been over the years many people that have sought to increase the tax burden on religious institutions. The concern is here, that if this sustains as law, then it will gain some traction and we might be facing the slippery slope of other kinds of past burdens that will be placed on nonprofits in general.”
A key part of the new IRS guidance is a special rule, enabling many employers to retroactively reduce the amount of their nondeductible parking expenses. Under this rule, employers will have until March 31, 2019, to change their parking arrangements to reduce or eliminate the number of parking spots they reserve for their employees. By making this change, many churches, schools, hospitals and other tax-exempt organizations may be able to reduce their associated unrelated business tax income.
The IRS also announced today that it will provide estimated tax penalty relief in 2018 to tax-exempt organizations that offer these benefits and were not required to file a Form 990-T last filing season
Agudath Israel is thankful to Chairman Kevin Brady, who has responded to the nonprofit community and has included a repeal of this tax in his tax bill. Agudath Israel is supporting and promoting that measure and we will keep its constituents apprised of the need for further engagement with members of Congress.