After Two Years, ECFA Rejoices in the Repeal of the Church and Nonprofit Parking Tax

ECFA members no longer have to pay tax on certain parking spaces. Congress has repealed the part of the 2017 Tax Cuts and Jobs Act that required nonprofits, including churches, ministries, schools, and other tax-exempt organizations, to pay a 21 percent unrelated business income tax (UBIT) on parking benefits provided to their employees. The repeal was signed into law on December 20, 2019.

ECFA began focusing on the repeal of this tax in early 2018. More than 2,700 organizations signed a petition from ECFA calling for repeal of the tax. ECFA representatives personally delivered the petition on Capitol Hill to the offices of members of the Senate Finance Committee, the House Ways and Means Committee, and more. Dan Busby, ECFA’s President, conducted dozens of TV, radio, internet and print interviews on the topic. 

“We are so appreciative to all the organizations that joined the fight against this improper tax,” says Busby. "We are so pleased for church and nonprofit organizations to obtain relief from this onerous tax. Had it not been repealed, the provision would have required tens of thousands of houses of worship to file tax returns for the first time in our nation’s history and would have imposed a new tax burden on houses of worship and nonprofit organizations."

Other leaders in the repeal effort have been equally strong in rejecting the tax. “It is about time that this ill-advised and absurd tax on America’s nonprofits found its way to the dust bin of history,” said Mike Batts, managing partner of Batts Morrison Wales & Lee and ECFA board member. “We said this was a bad idea from the beginning, and it didn’t get better with age. What is saddest about it is the immeasurable amount of money, time, energy, and focus that the nonprofit sector had to expend in an attempt to comprehend and apply this bad law,” added Batts. 

In its earlier analysis of the tax (both written and via webinar), ECFA had estimated that “the cost of compliance for churches and nonprofits could run into the tens of millions of dollars annually.” Congressional planners estimated that the tax would pull $1.7 billion over the next 10 years from the overall charitable sector.

The repeal of the tax is retroactive to January 1, 2018. It is as if the legislation was never enacted.

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.