Two appropriations bills that would fund the government for the 2020 fiscal year are pending consideration in the U.S. Senate.
One of the bills would repeal what is commonly referred to as the “parking tax”—that is, section 512(a)(7), which requires tax-exempt organizations to include in unrelated business taxable income the amounts they pay or incur on qualified transportation fringe benefits. Section 512(a)(7) was enacted as part of the 2017 tax law (Pub. L. No. 115-97, the law that is often referred to as the “Tax Cuts and Jobs Act” (TCJA)).
The bill states that the measure “shall take effect as if included in the amendments made by section 13703 of Pub. L. No. 115-97” so that the repeal of section 512(a)(7) would apply retroactively to the date of its enactment.
The legislation also includes a provision that would "flatten" the rate of tax on the net investment income of private foundations to 1.39%, replacing the current two-tier tax at rates of either 2% or 1%.
Finally, the legislation includes a provision that would allow mutual or cooperative telephone or electric companies to not take into account as income certain government grants when applying the requirement under section 501(c)(12) that 85% or more of income consists of amounts collected from members.
The U.S. House of Representatives on December 17, 2019, approved the bills.
Read TaxNewsFlash for more information about the bills.
For more information, contact a tax professional with KPMG’s Washington National Tax practice:
Ruth Madrigal | +1 202 533 8817 | firstname.lastname@example.org
Preston Quesenberry | +1 202 533 3985 | email@example.com
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