Guidance Provided for Organizations Claiming Credit for UBIT Paid on Repealed Tax

On December 20, H.R. 1865 - Further Consolidated Appropriations Act, 2020 was signed into law, retroactively repealing Code §512(a)(7) of the Internal Revenue Code, which had imposed an unrelated business income tax on qualified transportation fringe benefits provided to employees of tax-exempt organizations. The tax had gone into effect January 1, 2018.

Organizations impacted by the enactment of the code have potentially reported UBIT on their 2017 and 2018 Forms 990-T, Exempt Organization Business Income Tax Return. Since the repeal, those affected organizations and practitioners have been awaiting guidance on how to claim refunds or credits for the taxes paid.

Finally, that day has come. On January 21, the IRS released guidance on claiming refunds and advised filers to amend their 2017 and 2018 returns. Specific instructions are provided in the guidance.

Please contact Schneider Downs with any questions regarding this update; we’ll post further updates on our website as they become available.