Monday, October 06, 2008

Section 211 of the Bail Out Bill as it relates to Internal Revenue Code Section 132(f) - Qualified Transportation Fringe.

Cycle Snack: Transportation fringe benefit to bicycle commuters?

Since the original posting on this topic (Saturday) the Snack has been getting quite a few visits from what appears to be cyclists trying make to sense of this amendment. I thought as a service to everyone coming here I would take a shot at trying to update the existing law with the amendment. Hopefully, it will make sense.

Section 211 of the Senate Bailout bill states:

“(a) In General- Paragraph (1) of section 132(f) is amended by adding at the end the following:

`(D) Any qualified bicycle commuting reimbursement.’.

(b) Limitation on Exclusion- Paragraph (2) of section 132(f) is amended by striking `and’ at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting `, and’, and by adding at the end the following new subparagraph:

`(C) the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.’.

(c) Definitions- Paragraph (5) of section 132(f) is amended by adding at the end the following:

`(F) DEFINITIONS RELATED TO BICYCLE COMMUTING REIMBURSEMENT-

    `(i) QUALIFIED BICYCLE COMMUTING REIMBURSEMENT- The term `qualified bicycle commuting reimbursement’ means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.

    `(ii) APPLICABLE ANNUAL LIMITATION- The term `applicable annual limitation’ means, with respect to any employee for any calendar year, the product of $20 multiplied by the number of qualified bicycle commuting months during such year.

    `(iii) QUALIFIED BICYCLE COMMUTING MONTH- The term `qualified bicycle commuting month’ means, with respect to any employee, any month during which such employee–

      `(I) regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and

      `(II) does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).’.

(d) Constructive Receipt of Benefit- Paragraph (4) of section 132(f) is amended by inserting `(other than a qualified bicycle commuting reimbursement)’ after `qualified transportation fringe’.

(e) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.”


Internal Revenue Code Section 132(f) - Qualified Transportation Fringe.

The following is a version of the amended tax code section. An official version of the tax law may be found at 26 USC Section 132(f).

I have inserted the text from Section 211 in red.

(f) Qualified transportation fringe

(1) In general

For purposes of this section, the term “qualified transportation fringe” means any of the following provided by an employer to an employee:

(A) Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and place of employment.

(B) Any transit pass.

(C) Qualified parking.

(D) Any qualified bicycle commuting reimbursement.

(2) Limitation on exclusion

The amount of the fringe benefits which are provided by an employer to any employee and which may be excluded from gross income under subsection (a)(5) shall not exceed—

(A) $100 per month in the case of the aggregate of the benefits described in subparagraphs (A) and (B) of paragraph (1), and

(B) $175 per month in the case of qualified parking, and

(C) the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.

(3) Cash reimbursements

For purposes of this subsection, the term “qualified transportation fringe” includes a cash reimbursement by an employer to an employee for a benefit described in paragraph (1). The preceding sentence shall apply to a cash reimbursement for any transit pass only if a voucher or similar item which may be exchanged only for a transit pass is not readily available for direct distribution by the employer to the employee.

(4) No constructive receipt

No amount shall be included in the gross income of an employee solely because the employee may choose between any qualified transportation fringe other than a qualified bicycle commuting reimbursement and compensation which would otherwise be includible in gross income of such employee.

(5) Definitions

For purposes of this subsection—

(A) Transit pass

The term “transit pass” means any pass, token, farecard, voucher, or similar item entitling a person to transportation (or transportation at a reduced price) if such transportation is—

(i) on mass transit facilities (whether or not publicly owned), or

(ii) provided by any person in the business of transporting persons for compensation or hire if such transportation is provided in a vehicle meeting the requirements of subparagraph (B)(i).

(B) Commuter highway vehicle

The term “commuter highway vehicle” means any highway vehicle—

(i) the seating capacity of which is at least 6 adults (not including the driver), and

(ii) at least 80 percent of the mileage use of which can reasonably be expected to be—

(I) for purposes of transporting employees in connection with travel between their residences and their place of employment, and

(II) on trips during which the number of employees transported for such purposes is at least 1/2 of the adult seating capacity of such vehicle (not including the driver).

(C) Qualified parking

The term “qualified parking” means parking provided to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work by transportation described in subparagraph (A), in a commuter highway vehicle, or by carpool. Such term shall not include any parking on or near property used by the employee for residential purposes.

(D) Transportation provided by employer

Transportation referred to in paragraph (1)(A) shall be considered to be provided by an employer if such transportation is furnished in a commuter highway vehicle operated by or for the employer.

(E) Employee

For purposes of this subsection, the term “employee” does not include an individual who is an employee within the meaning of section 401 (c)(1).

(F) DEFINITIONS RELATED TO BICYCLE COMMUTING REIMBURSEMENT-

(i) QUALIFIED BICYCLE COMMUTING REIMBURSEMENT- The term `qualified bicycle commuting reimbursement’ means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.

(ii) APPLICABLE ANNUAL LIMITATION- The term `applicable annual limitation’ means, with respect to any employee for any calendar year, the product of $20 multiplied by the number of qualified bicycle commuting months during such year.

(iii) QUALIFIED BICYCLE COMMUTING MONTH- The term `qualified bicycle commuting month’ means, with respect to any employee, any month during which such employee–

(I) regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and

(II) does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).

(6) Inflation adjustment

(A) In general

In the case of any taxable year beginning in a calendar year after 1999, the dollar amounts contained in subparagraphs (A) and (B) of paragraph (2) shall be increased by an amount equal to—

(i) such dollar amount, multiplied by

(ii) the cost-of-living adjustment determined under section 1 (f)(3) for the calendar year in which the taxable year begins, by substituting “calendar year 1998” for “calendar year 1992”.

In the case of any taxable year beginning in a calendar year after 2002, clause (ii) shall be applied by substituting “calendar year 2001” for “calendar year 1998” for purposes of adjusting the dollar amount contained in paragraph (2)(A).

(B) Rounding

If any increase determined under subparagraph (A) is not a multiple of $5, such increase shall be rounded to the next lowest multiple of $5.

(7) Coordination with other provisions

For purposes of this section, the terms “working condition fringe” and “de minimis fringe” shall not include any qualified transportation fringe (determined without regard to paragraph (2)).

So, assuming I did this correctly, it looks like you still have to convince your employer to give you this benefit. Now, it will be interesting to find out what are the minimum requirements by any company to receive this benefit. For example, how many times a week/month do I have to ride to work for this count? It looks like the maximum benefit is $20/month or $240/year. That will certainly get you a low end commuter but it will not cover all the additional gear that you will need.

First thing I do when I get to the office this morning is hitting the Benefits website and see what I can find, otherwise, I am calling HR.

3 comments:

calGone said...

20 bones/rideable month - could someone define rideable month? anyway, my Co. (#ees = 2) purchased a bicycle for employee use.

Anonymous said...

A rideable month is one which you have used you bike to get to and/or from work for a large majority of the work days contained in that month.

Mark said...

Still, you have to be able to quantify a "large majority" otherwise it's too nebulous. Somebody needs to put a value on that.