If a business owns or leases a parking facility where employees park, then an employer may use any reasonable method to determine the cost of providing parking in that facility to the employees. (Photo: Shutterstock)
Employers who provide parking to employees, take note: the expense has gone up and, for tax-exempt employers, may now result in additional tax liability.
As previously noted, the Tax Cuts and Jobs Act brought surprising change in this area. For for-profit employers, the cost of providing parking to employees is no longer permitted as a deduction. For tax-exempt employers, the cost of providing parking to employees is now included in Unrelated Business Taxable Income (UBTI) calculations.
In December of last year, the IRS released new, interim guidance instructing employers exactly how to calculate this cost. Its Notice 2018-99 provides rather comprehensive guidance and addresses a number of smaller issues that had been left open under the Tax Cuts and Jobs Act. Its primary focus, though, is the process of calculating parking expenses.
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