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Reps. Courtney and Larson Highlight New Provisions for Nonprofit and Religious Organizations Legislation supported by both members repealing tax placed on nonprofit and religious organizations is now law

January 15, 2020
Press Release

WASHINGTON, DC – Today, Congressmen Joe Courtney (CT-02) and John Larson (CT-01) released copies of letters they wrote to Connecticut nonprofit and religious organizations to inform them of good news that a major tax provision hurting nonprofits, including churches, synagogues, and other faith-based groups, has been repealed. In December 2019, the House passed and the President signed into law the Taxpayer Certainty and Disaster Relief Act of 2019 (H.R. 3301). H.R. 3301 contains a provision to repeal the “unrelated business income tax (UBIT)” levied against religious and nonprofit organizations as part of the 2017 Tax Cuts and Jobs Act.

Following enactment of the 2017 Tax Cuts and Jobs Act, UBIT was imposed on religious and nonprofit organizations, which required them to pay a 21% tax on parking and transportation benefits provided to their employees. The new tax placed an enormous burden on many religious and nonprofit organizations in Connecticut, which were forced to divert resources away from their missions towards paying for the UBIT. In their letter to faith and community leaders across Connecticut, Reps. Courtney and Larson highlighted the benefits of repealing the UBIT through H.R. 3301, and noted that many organizations who paid a UBIT in 2018 and 2019 will be entitled to a refund. The members wrote, in part:

“[…] the Tax Cuts and Jobs Act, imposed a new tax on nonprofits, including religious organizations, which required nonprofits to pay a 21% UBIT on parking and transportation benefits provided to their employees. This tax has been an enormous burden to many nonprofit and religious organizations in Connecticut.

“Fortunately, there is good news. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 was signed into law in December and contained a provision repealing the UBIT on parking and transportation benefits. The repeal applies retroactively to the 2018 and 2019 tax years and repeals the tax for future years as well. We voted in strong support of the legislation included in this important tax repeal when it was considered in the House in December and are glad that nonprofits throughout the country are no longer required to pay this arduous tax.

“As a result of this repeal, nonprofits and faith groups that were being taxed on employee benefits can now use their precious resources towards the mission of their organization. Tax-exempt organizations, such as churches, synagogues, and charitable organizations, provide enormous benefits to our communities and should never have been taxed on these benefits in the first place.”

Both Rep. Courtney and Rep. Larson voted in December to pass the Taxpayer Certainty and Disaster Relief Act of 2019. The Representatives sent today’s letters to various nonprofit and religious organizations throughout Connecticut, including: the Norwich Area Clergy Association, the NAACP, the Jewish Federation Association of Connecticut, the Connecticut Nonprofit Alliance, the Connecticut Conference of the United Church of Christ, the Connecticut Conference of Churches, the Archdiocese of Hartford and the Roman Catholic Diocese of Norwich, Shiloh Baptist Church, and Trinity Missionary Baptist Church.

A copy of the full letter can be viewed online.