As you know, the Tax Cuts and Jobs Act enacted at the end of 2017 imposes an unfair — and confusing — 21% unrelated business income tax on the expenses that tax-exempt nonprofits incur for providing their employees with transportation fringe benefits, such as parking and transit passes. As a result, nonprofits, foundations, and churches must pay this new tax not only on the amount of direct expenditures they make, but also on the amount that their employees have withheld from their paychecks on a pre-tax basis.
For example, imagine that your organization spends $100 per month to buy bus passes for a few staff members. Other staff have arranged to have part of their paycheck withheld and used to pay for parking - let’s say these employees use a total of $200 per month this way. Your organization must now pay $756 per year in taxes.
As we near the end of the first quarter of the year, some nonprofits have already been forced to stop providing such benefits. Others are finding ways to pay the new taxes. Still others are waiting to see how it will play out in Congress. This makes March a crucial time for our state’s senators to act.
This new tax is diverting money away from already-scarce unrestricted funds and making it more difficult for nonprofits to support their staff. And, because it applies to houses of worship and other nonprofits that aren’t required to file 990s, it’s also causing compliance nightmares.
The good news is that last week a bill was introduced in Congress to repeal this tax on nonprofits. The bill is the Lessening Impediments From Taxes (LIFT) for Charities Act and is being brought by both Democrat and Republican members of Congress. Because it has bipartisan support, it has been introduced in both the House and Senate with the hope that it will get through Congress quickly.
How can you help?
Our senators — Senator Feinstein and Senator Harris — need to hear from the nonprofit community – you! – that this unfair and confusing tax is hurting your organization and community. CalNonprofits has sent them letters conveying what we’ve heard from nonprofits and urging them to become co-sponsors of the LIFT for Charities Act. Below is some sample language to use when you call or email their offices, as well as a sample Twitter post.
Senator [NAME] there is absolutely no dispute, partisan or otherwise, that the LIFT for Charities Act is urgently needed for the sake of our communities and your constituents. On behalf of the nonprofits in California, we ask you to co-sponsor S. 632 and sending a clear signal that you and the Senate are standing with the organizations upon which all of your constituents rely.
Contact Information
Senator Dianne Feinstein’s office: (202) 224-3841
Senator Kamala Harris’ office: (202) 224 - 3553
Email Dianne Feinstein through her website here
Email Kamala Harris through her website here
Twitter
.[Senator’s Twitter Handle] The LIFT for Charities Act repeals an unfair and confusing tax on nonprofits and houses of worship - it's urgently needed for the sake of our communities and your constituents. Please co-sponsor S.632! @CalNonprofits
Dianne Feinstein’s Twitter handle is @SenFeinstein
Kamala Harris’ Twitter handle is @SenKamalaHarris
And if you have time, let us know what response (if any) you get to your calls, emails, and tweets in the comments below.
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