Ahead of Tax Deadline, Underwood Announces New Tax Refund Opportunities for Local Nonprofit Organizations
WASHINGTON— Ahead of the April 15 tax deadline, Congresswoman Lauren Underwood (IL-14) continues her work to help Illinois communities unfairly hurt by the Tax Cuts and Jobs Act (TCJA). The Republican tax law enacted in 2017 applied a new 21% tax on parking and transportation benefits that tax-exempt organizations, including houses of worship and charities, provide to their employees.
In December 2019, Congress passed legislation that included the Taxpayer Certainty and Disaster Tax Relief Act, to repeal this harmful and unfair tax on nonprofit organizations retroactively to the date of enactment of the TCJA. As a result of this repeal, organizations that paid these taxes on parking and transportation benefits are now entitled to a refund, and will not have to include the tax on their tax filing this spring.
“The 2017 Republican tax law cut taxes for the wealthy and corporations at the expense of middle class families and organizations that serve our community, including nonprofits and houses of worship. Fortunately, Congress reversed the new tax on transportation benefits in December 2019, and the IRS recently issued guidance on how organizations can obtain a refund for previous tax payments,” said Underwood. “I encourage all eligible nonprofits in our community to take advantage of this refund opportunity as they prepare to file taxes this year.”
On January 22, 2020, the Internal Revenue Service issued new guidance on the appropriate steps that organizations should take in the refund process to ensure nonprofits receive the money they are owed without delay and further hardship.
Across the United States, there are approximately 1.8 million nonprofits, and nearly 90 percent of them have budgets of less than $500,000. Estimates indicate that this new tax on transportation benefits diverts an average of $12,000 from each nonprofit organization per year.
In Congress, Underwood has continuously fought to provide tax relief for Illinois families unfairly harmed by the Tax Cuts and Jobs Act of 2017. In December, legislation championed by Underwood to reduce taxes for middle class families passed the House. The Restoring Tax Fairness for States and Localities Act (H.R. 5377) would help middle class families by immediately eliminating the marriage penalty, which currently does not allow two married people a higher SALT deduction than single taxpayers, and eliminating the SALT deduction cap altogether in 2020 and 2021. In January, Underwood urged the Internal Revenue Service to address the disproportionate tax burden being placed upon Illinois families due to changes in the SALT deduction as passed in the Tax Cuts and Jobs Act. In a letter, Underwood expressed concern that current efforts by the IRS are insufficient. In March, Underwood introduced H.R. 1757 with Representative Sean Casten (IL-6) to address the Republican tax law’s changes to the SALT deduction. In June, Underwood testified before the Ways and Means Committee to advocate for middle class families and urged the committee to consider her legislation. In July, Underwood supported the bipartisan H.J. Res. 72 to overturn harmful U.S. Treasury Department regulations aimed at restricting Americans from deducting charitable contributions from their federal taxes. Underwood is a member of the House of Representatives SALT working group.