IRS issues guidance for determining nondeductible amount of parking fringe expenses and unrelated business taxable income; provides penalty relief to tax-exempt organizations
December 11, 2018
Authored by: Keith Kehrer
WASHINGTON – The Internal Revenue Service today issuedinterim guidance regarding the treatment of qualified transportation fringe benefit expenses paid or incurred after Dec. 31, 2017.
The new rules assist taxpayers in determining the amount of parking expenses that are no longer tax deductible. They also help tax-exempt organizations determine how these nondeductible parking expenses create or increase unrelated business taxable income (UBTI).
The IRS acknowledges that this guidance falls late in the year and taxpayers that own or lease parking facilities may have already adopted reasonable methods in 2018 to determine the amount of their nondeductible parking expenses. Taxpayers may rely on the guidance or, until further guidance is issued, use any reasonable method for determining nondeductible parking expenses related to employer-provided parking.
A key part of this guidance is a special rule, enabling many employers to retroactively reduce the amount of their nondeductible parking expenses. Under