Transportation Benefits & Non-Profit Organizations
The tax reform bill that passed in December 2017 affected employer-provided transportation benefits. While qualified transportation benefits are still tax-free to employees (either through pre-tax payroll deductions or employer subsidies), employers can no longer take a business deduction for this expense. The latest guidance from the IRS, as interpreted by CPA firms like Tate & Tryon (Taxability of Transportation Fringe Benefits), indicates that even tax-exempt employers may be affected by this change since transportation expenses could now increase an organization’s unrelated business taxable income.
Tax-exempt organizations should contact their accountants or other tax advisors to review the new rules for unrelated business income, transportation benefits, and other potential tax changes.