Nonprofit Accounting Basics

IRS Guidance Released for Tax-Exempt Organizations to Claim Credit/Refund for Fringe Transportation Benefits Tax

Note: Articles published before January 1, 2017 may be out of date. We are in the process of updating this content.

Updated: 
Mar 17, 2020
Author: 

Dan Weaver, CPA

Councilor, Buchanan and Mitchell, P.C.

On January 21, the IRS issued guidance for how not-for-profit organizations can claim a refund or credit for unrelated business income tax related to fringe transportation benefits, for which they became liable under Internal Revenue Code (IRC) Section 512(a)(7). Tax-exempt organizations wishing to claim the credit or refund after the repeal of the tax under the Taxpayer Certainty and Disaster Tax Relief Act of 2019 may file an amended Form 990-T for tax years 2017 and/or 2018.

The IRS recommends that tax-exempt organizations filing an amended Form 990-T write “Amended Return – Section 512(a)(7)” across the top of the amended filing.

Guidance for Amended 990-T Filings for 2017 and 2018

There are some slight differences for how tax-exempt organizations should file amended returns for tax years 2017 and 2018 including the following:

2017

• Subtract the overall tax amount for which your organization claimed liability on the original return by the amount of your obligation under 512(a)(7). Tax-exempt groups that followed the Recent Developments article posted on IRS.gov will find this amount on line 12.
• Enter the amount of tax you entered on line 48 of your original 990-T on line 45g (“Other”) of the amended return.
• Any overpayment amount should be entered on line 49 (“Overpayment”), which you can then request as a refund or credit on line 50.

The rest of the amended Form 990-T should be completed based on the above-mentioned adjustments.

2018

• Enter “0” on line 34 (Amounts paid for disallowed fringes).
• Write the amount of tax entered on line 53 of your original return on the “Other” subline of line 50g in your amended return.
• Any overpayment amount should be entered on line 54 (“Overpayment”), which you can then request as a refund or credit on line 55.

The rest of the amended Form 990-T should be completed based on the above-mentioned adjustments.

Additional Guidance

In addition to filing the amended Form(s) 990-T, tax-exempt organizations should attach a statement breaking out the changes made (including specific line numbers) from the original returns including the reason for each change [in the case of the IRS guidance released on January 21 for “the repeal of Section 512(a)(7)”].

Deadline to File an Amended Claim

Tax-exempt organizations filing an amended Form 990-T due to the repeal of Section 512(a)(7) must still abide by the deadlines and claim timelines issued under IRC Section 6511. These time limits are either three years from the filing date of the original Form 990-T or two years from the date the tax was paid (whichever was later).