Democrats press IRS to expedite refunds for nonprofits after change to Trump tax law

Two key House Democrats are urging the IRS to create an “expedited process” to provide refunds for nonprofits that paid a tax on their employee transportation benefits.

A tax on the benefits was imposed as a result of President Trump’s 2017 tax-cut law, but it garnered widespread criticism, prompting Congress to retroactively repeal it last month.

“That policy undermined any semblance of a fair or just tax code,” Reps. Richard Neal (Mass.) and John Lewis (Ga.) said in a statement Wednesday. “Congress did our part to right this wrong — now it is time for the IRS to provide tax-exempt organizations with the guidance they need to claim and receive the refunds they are due.”

Neal is chairman of the House Ways and Means Committee, and Lewis is head of the panel’s Oversight Subcommittee.

The GOP tax law imposed a 21 percent unrelated business income tax on expenses that houses of worship and other nonprofits incur for providing parking and transit benefits to their employees. Republicans created the tax to provide parity between tax-exempt organizations and for-profit companies, which lost their ability to deduct employee transportation benefit expenses under the 2017 law.

The tax on nonprofits’ transportation benefit expenses drew criticism from charities, religious organizations and lawmakers on both sides of the aisle who argued that it detracted from nonprofits’ ability to focus their resources on their charitable work. The tax was repealed as part of the government-funding package Trump signed in December.

“We proudly supported repeal of this tax, which was unfair to charitable organizations and diverted money away from the good work that these organizations do,” Neal and Lewis wrote in a letter to IRS Commissioner Charles Rettig.

The two lawmakers requested the IRS provide a quick process for providing refunds to nonprofits and that it issue guidance about the steps nonprofits should take during the refund process.