Bipartisan legislation from Sens. Chris Coons, D-Delaware, and James Lankford, R-Oklahoma, 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 Dec. 16.
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 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.”
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 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.