August 9, 2018
Support the Lessening Impediments from Tax (LIFT) for
Charities Act (H.R. 6460)
For years, many nonprofit employers, like Federations and Jewish agencies,
have provided transit benefits to their employees as a tax-free or
tax-advantaged fringe benefit.
The recent tax reform bill, The Tax Cuts and Jobs Act of 2017, provides
that, effective January 1, 2018, taxable employers may no longer deduct the
value of those transportation fringe benefits as a business expense and
nonprofit employers that provide transportation fringe benefits to their
employees must report and pay tax on the value provided as “unrelated business
income.” The application of what is called an “unrelated business income tax”
(UBIT) on the portion of a charity’s payment for transportation fringe benefits
attempts to “level the playing field” between taxable and nontaxable employers.
The IRS recently stated that, even employers who pay for transportation fringe
benefits via pre-tax dollars through Compensation Reduction Agreements (CRAs)
will have to pay UBIT based on the amount included in the employee CRAs. The
federal tax will be imposed at the 21 percent corporate tax rate and state
income taxes could also apply. However, this new tax could represent a
substantial unbudgeted financial burden on Federations and agencies, especially
in urban areas, where the value of transportation fringe benefits, such as
paid-employee parking, transit passes, and other transit benefits, is
Congress can fix this by passing the Lessening Impediments
from Tax (LIFT) for Charities Act (H.R. 6460).
Please contact your members of Congress and urge them to pass this
legislation repealing the unfair tax on charities that provide qualified
transportation fringe benefits to their employees. The House version of
H.R. 6460 was introduced by Rep. Mark Walker (R-NC) and a companion bill will
be introduced soon in the Senate by Sen. James Lankford (R-KS).
In addition to advocacy on Capitol Hill, JFNA, along with numerous national
charities and other non-profits, has raised objections with the Treasury
Department to both the new law, as well as the IRS interpretation of CRAs.
Leaders in Congress are also asking Treasury to intervene and provide immediate
information, please contact Steven Woolf, Senior Tax Policy Counsel at (202)
736 –5863 or email@example.com.
William C. Daroff
Senior Vice President for Public Policy &
Director of the Washington Office