Fringe Benefits Bill Gaining Traction in Congress – Has Implications for Providers as Employers

ANCOR has been following discussions in Congress on a bill that would repeal a 21 percent tax on UBIT (employer-provided fringe benefits) because this affects non-profit providers in their function as employers. The tax was originally instituted as part of the tax reform package Congress passed in late 2017. We are sharing this update from ASAE, of which ANCOR is a member, and will continue to keep members informed of developments on this topic.

As shared by ASAE:

“ASAE and other members of the UBIT Coalition continue to meet with congressional offices to seek repeal of a 21 percent tax on so-called fringe benefits – such as free parking or mass transit assistance – that nonprofits provide to employees.

Just before the holidays, the House passed a tax package authored by Rep. Kevin Brady (R-TX) that would have repealed the transportation benefits tax, along with other tax changes. The Senate did not take that bill up before adjourning for the year, however, and House Democrats now control the agenda in the House.

ASAE and the UBIT Coalition are scheduling meetings with new members of the House Ways and Means Committee and the Senate Finance Committee to urge them to repeal the transportation benefits tax, which projects as a huge burden for associations and other nonprofit groups. Sen. James Lankford (R-OK), who is a new member of the Senate Finance Committee, introduced a UBIT repeal bill last year and Rep. Brendan Boyle (D-PA) co-signed a UBIT repeal bill in the House.

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A new report commissioned by Independent Sector reveals that the new tax will divert an average of $12,000 away from each nonprofit’s mission per year. About 10 percent of nonprofits are considering dropping transportation and parking benefits entirely, although these employer-provided benefits are mandated in some metropolitan areas like Washington, DC, New York and San Francisco.”