Overview
Treasury and the IRS have issued interim guidance regarding the taxation of qualified transportation fringe (QTF) benefits, including public transit passes and parking allowances, after changes made by the Tax Cuts and Jobs Act (TCJA). The TCJA generally disallowed a deduction for expenses for QTF benefits provided by for-profit employers to their employees, and increased a tax-exempt organization’s unrelated business taxable income (UBTI) by the amount of non-deductible QTF expenses. Notice 2018-99 provides interim guidance for determining the amount of QTF parking expense that is nondeductible (by a for-profit) or must be added to UBTI (by a tax-exempt entity). Notice 2018-100 provides penalty relief for certain tax-exempt employers that underpaid their estimated income tax due to the changes to the tax treatment of QTF benefits, provided that they timely file Form 990-T and pay the QTF related tax.