After being passed by the House of Representatives, this year’s reconciliation bill (H.R. 1) moved to the Senate, which passed its own version of the legislation today, July 1. The Senate bill would preserve without significant change many tax-related items from the House bill. There are several provisions
Continue Reading Senate Reconciliation Bill Drops Unpopular UBTI Proposal for Transportation FringesParking Benefits
What’s Old is New Again: House Bill Would Resurrect UBTI for Tax-Exempt Organization Transportation Fringes, Make Permanent Suspension of Bicycle Commuting Reimbursement Exclusion
By Lydia Marik & S. Michael Chittenden on
The House of Representatives continues work on a reconciliation bill that would enact significant tax provisions and spending cuts. The various legislative committees have completed work on the areas of the bill within their jurisdiction, including the Ways and Means Committee, which proposed language that would enact $3.8 trillion in tax cuts over the next ten years. Over the weekend, the House Budget Committee consolidated the legislation and the House Bill is now before the Rules Committee, where a managers’ amendment may be considered before it heads to the House floor. This article is one of a series of articles discussing various proposals in the legislation that touch on tax withholding, reporting, and fringe benefits.
Among other changes to the Internal Revenue Code, two of the House Bill’s changes revisit measures included in the 2017 tax reform package (commonly referred to as the “Tax Cuts and Jobs Act”) addressing commuter benefits provided by employers.Continue Reading What’s Old is New Again: House Bill Would Resurrect UBTI for Tax-Exempt Organization Transportation Fringes, Make Permanent Suspension of Bicycle Commuting Reimbursement Exclusion
IRS Issues Final Regulations on Commuting Expenses Deduction Disallowances
Yesterday, December 9, the IRS released final regulations implementing the Section 274(a)(4) and 274(l) deduction disallowances, adopted as part of the 2017 Tax Cuts and Jobs Act. Section 274(a)(4) disallows employer deductions for the cost of providing qualified transportation fringe (“QTF”) benefits provided to employees. Section 274(l) provides a broader deduction disallowance for expenses paid for, or to reimburse for, employees’ trips between their residences and their places of employment. Both deduction disallowances took effect for tax years beginning after December 31, 2017.
The final regulations largely follow the approach taken in the proposed regulations issued in June, which built on earlier guidance provided in Notice 2018-99. Treasury Regulation § 1.274-13 addresses the deduction disallowance under section 274(a)(4) for the cost of QTFs provided under section 132(f), such as qualified parking, transit passes, and other tax-free commuting benefits. Treasury Regulation § 1.274-14 addresses the deduction disallowance under section 274(a).
Continue Reading IRS Issues Final Regulations on Commuting Expenses Deduction Disallowances
New D.C. Transportation Benefits Law Creates Potentially Bumpy Road for Employer Compliance
By Sarah Friedman & S. Michael Chittenden on
Posted in Employee Benefits, Fringe Benefits
Soon, many District of Columbia employers will be subject to a new “parking cash-out” law designed to promote environmentally friendly commuting options, i.e., other than individual commutes by automobile. At a high-level, parking cash-out laws generally require employers that provide free or subsidized parking to offer to pay employees cash in lieu of the subsidized parking if the employee uses another commuting method. Failure to satisfy the act’s requirements may result in the imposition of civil fines and penalties.
The Transportation Benefits Equity Amendment Act of 2020 (the “Act”) became effective June 24, 2020, but originally contained a funding provision that delayed its operational effect. Similar legislation has been in place in some areas for over 20 years. The D.C. Council has since repealed the funding provision, and we expect the Act’s requirements to take effect in mid-November 2020. The timing of the Act’s adoption has raised some eyebrows, as many employers and employees are seeking ways for employees to commute that avoids crowded public transportation in light of the ongoing COVID-19 pandemic.
As this post discusses, the Act’s requirements pose difficult compliance questions for employers. Guidance would be welcome in helping employers implement the Act, and will hopefully be forthcoming soon. Employers are encouraged to consult with tax and benefits counsel as they evaluate their fringe benefit programs for compliance with the Act.
Continue Reading New D.C. Transportation Benefits Law Creates Potentially Bumpy Road for Employer Compliance