Parking Related Tax Update for Health Centers

Parking Related Tax Update For Health Centers

Believe it or not, there may be circumstances where health center employees are taxed on their transportation or parking benefits provided by their employer. The IRS has recently issued initial guidance on determining taxability and compliance with changes made to these tax law through tax reform passed in December of 2017. The guidance and the law itself is a bit tedious. However, I hope and expect that many health centers will be able to find an exception from the tax for their employees.

For Health Centers That Own or Lease Their Own Parking Lots, Action Taken by March 31, 2019 Could Reduce Their 2018 Tax Liability

NACHC – 1/7/19 – http://www.nachc.org/

The Tax Cut and Jobs Act, passed in December 2017, eliminated the tax deduction for most transportation benefits – including parking – that non-profit organizations such as health centers provide to their employees. This new requirement went into effect on January 1 of last year, and in December 2018, the IRS issued preliminary guidance regarding when non-profit organizations that own or lease their own parking lots must pay tax on the value of parking benefits provided to employees. While the IRS will allow these organizations to use “any reasonable method” to determine the value of employee parking benefits, it states that it will not consider these benefits to be taxable if the lot has no spaces exclusively reserved for employees and at least half of the spaces are normally available for patient or public use. Changes made to parking lots – such as removing signs indicating spots reserved for employees – will be considered retroactive to January 1, 2018 as long as they are made by March 31, 2019. Note that this possible exemption does not apply to organizations who rent or own individual parking spots for the exclusive use of employees. Health centers should consult their tax advisors for advice specific to their situation.