By Bob Smietana
A new tax law could cost churches and other nonprofits a bundle.
As in a billion dollars—just for offering free parking and other benefits to employees.
Last year’s tax reform bill changed the law so for-profit businesses could no longer write off such benefits. Unfortunately, says Evangelical Council for Financial Accountability (ECFA), that change affects churches and other nonprofits.
“A nonprofit organization that simply allows its employees to park in a parking lot or garage that is part of the organization’s facilities will be subject to a tax on the cost of the parking provided,” says the ECFA.
Nonprofits could now owe a 21 percent tax on the cost of employee parking, gym memberships, and meals, reports Politico.
Churches and other nonprofits would have to file a tax return reporting “unrelated business income tax” or UBTI. They’d also have to pay accountants to sort out how much parking and other benefits are worth.
It’s a headache, says the ECFA. Only one in a hundred churches, they say, currently files a tax form for UBTI. Overall, churches and other nonprofits could pay a billion dollars in taxes, tax return preparation fees, and staff time.
“Churches and nonprofits will see their [collective] budgets cut by up to $1 billion dollars or they will have to raise another billion in charitable contributions,” says the ECFA.
According to Politico, the Jewish Federations of North America could owe $75,000 in taxes.
“There’s going to be huge headaches,” said Galen Carey, vice president of government relations at the National Association of Evangelicals, told Politico. “The cost of compliance, especially for churches that have small staffs or maybe volunteer accountants and bookkeepers — we don’t need this kind of hassle.”
More than 1,300 churches and other nonprofits have signed a petition sponsored by the ECFA, asking Congress to repeal this section of the law.
Americans gave $410 billion dollars to charitable groups last year, according to Giving USA.
Of those donations:
- $127.37 billion went churches and other religious groups.
- $58.9 billion went to education.
- $50.06 billion went to human services.
- $38.27 billion went to health organizations.
- $29.59 billion went to public-society benefit organizations.
- $19.51 billion went to arts, culture, and humanities.
- $22.97 billion went to international affairs.
- $11.83 billion went to environmental and animal organizations.
- $45.89 billion went to foundations.
BOB SMIETANA (@BobSmietana) is senior writer at Facts & Trends.