Treasury Issues One Time Waiver of Penalty for Failure to Pay Estimated Tax Related to UBIT on Nondeductible Qualified Transportation Fringe Benefits

In Notice 2018-100, issued yesterday, the Treasury Department, “in the interest of sound tax administration” provides a waiver of penalties for exempt organizations that would not have been required to file a UBIT return (990-T) for 2017.  Recall that new 512(a)(7) makes the amount of qualified transportation fringe benefits taxable as unrelated business taxable income.  This new tax means that many organizations that would not have had to make estimated tax payments in 2018 under IRC 6655 in the absence of 512()(7) could be subject to an additional tax for failure to make estimated taxes in 2018 (because they suddenly had “phantom” UBTI by providing QTFBs).  The Notice waives the additional tax for those tax exempt organizations so that organizations can have “additional time to develop the knowledge and processes to comply with the estimated income tax requirements.”  

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