A Tax on Free Campus Parking?

Rick Seltzer:

If you park at no charge in the university lot in front of your campus office, you might be sticking your employer with a tax bill without even knowing it.

Or maybe you ride public transportation to work at an urban college. You purchase your metro pass using money from your paycheck that’s routed to a pretax account instead of your taxed paycheck. You also might be unknowingly leaving your employer holding a new tax bill.
Colleges and universities are facing possible new tax bills like these, plus a dizzying number of questions about how and when they should be calculated, in the wake of the Republican tax-reform package signed into law at the end of last year. Even seven months after President Trump etched his signature onto the bill, institutions have little guidance on what, specifically, they will be paying.

The uncertainty was clear Sunday at the National Association of College and University Business Officers annual meeting. A tax update session seemed to raise more questions than answers about a host of issues, including unrelated business income taxes on employee parking, transit benefits and the sections of the new tax code covering them.

Experts made clear that colleges aren’t blaming employees for tax law changes they couldn’t control. Still, they warned that under some interpretations, universities might have to pay taxes on employee parking benefits even if they don’t charge anyone to park in lots at all. They worry the law will be interpreted to say that employers have to pay taxes on the amount they spend to maintain one of their parking lots where they reserve spaces for employees — like money paid to pave or plow.

A controversy arose a few years ago regarding the free parking provided to Madison School District administrators. I don’t know if this practice continues.