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Some Nonprofits Could Ax Fringe Benefits Because of New Tax

Jan. 24, 2019, 3:18 PM

Ten percent of nonprofit groups are considering dropping their employee transportation benefits entirely as they reckon with a provision imposed by the 2017 tax overhaul, new research says.

New tax code Section 512(a)(7)—which requires certain nonprofits to a pay a 21 percent “unrelated business income tax” on various fringe benefits—will cost organizations on average $12,000 a year, advocacy group Independent Sector said in a report released Jan. 24. The tax burden will be bigger for smaller nonprofits as a percentage of budget, the report said.

  • New rules under Section 512(a)(6) requiring nonprofits to calculate the tax for ...