The IRS posted instructions for filing an amended Form 990-T to claim a refund or credit of the unrelated business income tax (UBIT) reported and paid on Form 990-T for 2017 or 2018 as a result of section 512(a)(7).
Section 512(a)(7), 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”) included in unrelated business taxable income (UBTI) amounts paid or incurred for qualified transportation fringes, including employee parking, after December 31, 2017. The Further Consolidated Appropriations Act, 2020 (Pub. L. No. 116-94), enacted on December 20, 2019, retroactively repealed section 512(a)(7) back to its date of enactment. Tax-exempt organizations may be able to claim a refund or credit for UBIT amounts paid for taxable years beginning in 2017 and 2018 and for estimated tax paid on UBTI in 2019.
The IRS release states that taxpayers may claim a refund or credit of UBIT paid for tax years beginning in 2017 and 2018 by filing an amended Form 990-T as described in the form’s instructions and writing “Amended Return” at the top of Form 990-T or, if the amended return is being filed only to claim a refund, credit, or adjust information due to the repeal of section 512(a)(7), writing “Amended Return – Section 512(a)(7) Repeal.” Taxpayers must also attach a statement indicating the line numbers on the original return that were changed and the reason for each change (for example, stating “repeal of section 512(a)(7)”).
The release contains precise instructions for preparing an amended Form 990-T. The instructions vary depending on whether the Form 990-T relates to a tax year beginning in 2017 or 2018 because the 2018 Form 990 contained a specific line for reporting UBTI under section 512(a)(7) while the 2017 Form 990-T did not.
Organizations also need to consider whether a refund of state UBIT paid as a result of section 512(a)(7) is available, although the process and requirements for any such refund claims will vary by state.
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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