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tax-reform

One of the less mentioned provisions of the 2017 Tax Cuts and Jobs Act is a 21% income tax on churches and nonprofits, according to the Evangelical Council for Financial Accountability (ECFA). The provision requires nonprofit organizations (including churches) to file federal income tax returns (Form 990-T) and pay unrelated business income tax on these benefits. These include the cost of parking provided to employees, whether it’s in a garage or a parking lot.

The ECFA says the cost of compliance for churches and nonprofits could run into the tens of millions of dollars annually, plus there is the added expense associated with filing Form 990-T.

The ECFA circulated a position statement protesting the tax and urging Congress to repeal the provision. It has been signed by more than 2,600 churches and nonprofits, including the Church of the Nazarene, several districts and local churches, and at least one Nazarene university.

Lawmakers have introduced several bills to amend the law and remove the tax on churches. These include S.3332; H.R. 6504; H.R. 6460; and H.R. 6037.

According to the ECFA, the likelihood of the parking tax issue being resolved before the mid-term election is slim and the best prospect for undoing it will come in the lame duck session following the mid-terms. “With the heightened interest in repealing the parking tax provision and perhaps other fringe benefit elements which were included in the 2017 Tax Reform legislation, repeal is increasingly likely,” the ECFA said in a news release.

Churches may continue to sign the ECFA petition, plus they are urged to contact key legislators who may have a significant impact on the bills especially if they represent their district. These include Congressman Kevin Brady (R-TX), chairman of the House Ways and Means Committee; Sen. Orrin Hatch (R-UT), chairman of the Committee on Finance; and members of the House Ways and Means Committee and the Senate Committee on Finance.