Parking Lot Tax

Over the last several months you have heard about the "Parking Lot Tax". If you have, you know that there has been some real confusion about the requirements and rules related to this new potential tax on non-profits including every one of our churches.

If you have not yet heard about the "Parking Lot Tax", this post will explain what it is and a simple three-step test to know if your church is impacted by it, as well as a simple solution to avoid it, but you must take action quickly.

Without going into a boring, long detailed history of this tax, here is the low down. First, it is a real issue and one where churches need to take action by 3/30/2019 (the end of next week). Most of our churches can take a simple step to avoid having to deal with it. There is a push in Congress to have it repealed, but for now, it is here. The IRS has recently provided guidance.

Here are three questions each church should ask regarding the "Parking Lot Tax".

1) Does the local church own the parking lot we use?

If the answer is yes, then you pass the first test for avoiding the tax.

2) Do your employees regularly use less than 50% of the spaces provided?

If the answer is yes, then you pass the second test for avoiding the tax.

3) Do you have any employee "reserved spaces" in your parking lot?

This is where most of our churches may answer yes, which is the problem. To avoid the tax, you may no longer have signage for reserved parking for your staff. This includes reserved for the employee of the month, or pastor, or another specific position. Handicapped parking spaces are permissible.

Bottom Line:

If your parking lot is used primarily by church congregants and you have no reserved spaces for employees, then you don't have to pay the tax or file the 990-T annually. If non-profits (churches) removed any "reserved" signs for their staff by 3/30/2019, the IRS will consider them to have been retroactively removed as fo 1/1/2018 when the parking lot tax law took effect. So, all our churches need to remove any spaces/signs, etc. marking reserved spaces to employees.

I hope this helps.

Mark A. Dowley

Chief Operating Officer

LegalJamin Bradley