NEW UNRELATED BUSINESS INCOME TAX TO HIT CHURCHES

Pastor Smith was really excited about what the Church was doing for him in the way of additional benefits. He shared with me that not only did he and his staff have their own parking spots, but the Church Board just voted to provide him and the staff with a private parking garage. They felt this would be more conducive for the Pastor and staff so they could enter the building without having to brave the elements each Sunday—especially during inclement weather conditions.
 
I hated to do it, but I had to let the air out of Pastor Smith’s sail. In the recently passed in the Tax Cuts and Jobs Act of 2017, there was an obscure provision that would target business, including Churches, with a possible Unrelated Business Income Tax, if they provided parking spaces, including parking garages, to their staff.

The Obscure Code

This obscure provision” from the tax legislation appears to impose “a tax (the unrelated business income tax) of 21 percent on the value of free parking provided” by employers, including tax-exempt organizations like churches, to their employees through a newly added section 512(a)(7) of the tax code.
 
This may cost Churches and non-profit organizations millions of dollars in new tax liability.
 
Although many Legal and Accounting experts weighed in on this they could not agree as to how Churches would ultimately be affected.

Internal Revenue Service Weighs In

The IRS finally has weighed in on the topic and has issued some interim guidelines. For Churches to limit their tax liability the IRS has issued this statement:
 
A key part of this guidance is a special rule, enabling many employers to retroactively reduce the amount of their nondeductible parking expenses. Under this rule, employers will have until March 31, 2019, to change their parking arrangements to reduce or eliminate the number of parking spots they reserve for their employees.” Such a change made by a church or other employer will apply retroactively to Jan. 1, 2018, the agency said, possibly eliminating the need to file a Form 990-T.
 
By making this change, many churches, schools, hospitals and other tax-exempt organizations may be able to reduce their associated UBTI.

Why Churches Must Engage Us Now

If any Church had to pay a 21 percent tax on the fair market value of any reserved parking spaces or a parking garage for Pastor and staff, this could prove to be very expensive.
 
Chitwood & Chitwood has been navigating the troubled IRS waters for more than 80 years. We know how to get the best benefits for any Churches while operating within the legal frame work of IRS regulations.
 
This new tax change and others are covered in our Church Management and Tax Conferences across the USA. It would behoove every Pastor, Pastor’s Spouse, and Church Leader to attend the next available Conference. To register for the next Conference please visit us at www.cmtc.org or call 800-344-0076.
 
You cannot afford to function as a Church in this hostile IRS climate without the knowledge we will make available to you.
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By Dr. Micheal Chitwood

 

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What You Will Learn at our  Conferences

Our  Church Management Conferences  will arm you with the information you must have to shield your Church or Ministry from IRS intrusiveness; teach you how to get your Taxes to the lowest possible rate; and daily operate your Church or Ministry within IRS acceptable guidelines.

Our  Conferences  have been taught across the Nation for over 48 years. Because of the Penalties, Fines, and even Imprisonment that the IRS imposed on many Churches and Pastors, Dr. Chitwood felt led by the Holy Spirit to become a buffer between Churches, Ministers, and the IRS.

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