1. “Parking Lot Tax” – You may have heard about the IRS issuing guidance this week regarding the “Parking Lot Tax” which was part of the Tax Cuts and Jobs Act passed by Congress in December, 2017. In order to determine whether this affects your parish, consider the following key provisions:
If a parish reimburses employees for parking while they are at their parish (or pays a third party directly for a parking lease), this expense must be reported as unrelated business income on Form 990-T (and the parish must pay a 21% tax on expenses in excess of $1,000). Same with reimbursements for public transportation for employees to and from work.
If a parish owns a parking lot, an article published this week in the Church Law & Tax E-Newsletter titled “Is the Parking Lot Tax in Your Future?” will help parishes determine whether their parking lot is subject to the 21% tax. The link to the article can be found at the following url: https://www.churchlawandtax.
One provision that is clear is that if a church has parking spaces reserved for employees, the expenses related to those spaces always create unrelated business income. Parishes have until March 31, 2019 to change parking arrangements to remove or eliminate reserved employee spots and have these actions be treated as retroactive to January 1, 2018.
The second step is to determine if most of the parking spaces are utilized for employees or for the “general public.” If the majority of the spaces are utilized or available for the general public, then the church does not have unrelated business income (unless it has parking spaces reserved for employees). Please contact Kathi Workman if you have any questions or would like assistance in performing this analysis.
2. IRS Mileage Rates for 2019 – The standard mileage rates for the use of a car/small truck will be as follows:
– 58 cents per mile driven for business use, up 3.5 cents from 2018
– 14 cents per mile driven in service of charitable organizations
3. Reminder of Jan. 31 IRS filing deadline – The deadline for parishes to file W-2 wage statements and Form 1099-Misc independent contractor forms for 2018 is January 31, 2019. Blank 1099-Misc and 1096 forms can be ordered free of charge from the IRS website.