WASHINGTON – Bipartisan legislation from U.S. Senators Chris Coons (D-Del.) and James Lankford (R-Okla.) to protect churches, charities, and other nonprofit organizations is expected to become law as part of a bipartisan tax bill agreed to by House and Senate negotiators late yesterday. The Lessening Impediments from Taxes (LIFT) for Charities Act repeals a section of the tax code that requires some tax-exempt organizations to pay federal taxes on employee benefits, such as parking, meals, or transportation benefits.
“I believe that we have a moral obligation to support our neighbors most in need, and nonprofits play an essential role in doing just that,” said Senator Coons. “Requiring these organizations to pay a federal tax on employee benefits, something they have never been required to do before, causes them to not only face an increased operating cost, but also an administrative burden. The passage of this bill will help to ensure that America’s charitable nonprofits and houses of worship are able to continue providing critical services to communities without undue burden.”
“It is welcome news that the LIFT for Charities Act has been included the annual appropriations bill to be considered later this week,” said Senator Lankford. “Several of us have worked for months to correct a small provision in the 2017 tax reform bill that required some churches and nonprofit organizations to pay a tax on employee benefits, which could include items that have never been previously accounted for, such as a parking space. Most nonprofits were neither equipped to handle the additional administrative burdens or compliance costs, nor intended to be a source of revenue for the federal government. The fix included in this week’s appropriations bill is a huge win for our nation’s churches, charities, and other non-profits who are dedicated to serving our neighbors and meeting the needs of our communities. We should protect our non-profits, not tax them.”
The 2017 tax law created the provision requiring charities to pay the new tax on employee benefits. In November 2018, Lankford and Coons sent a letter
to the Secretary of the Treasury, Steven Mnuchin, expressing their concerns about the challenges faced by tax-exempt organizations, such as charitable nonprofits, houses of worship, and foundations, regarding compliance with new tax liabilities.