The mass transit component of QTFBs, which covers expenses incurred in commuting to work by train, bus or vanpool and other forms of mass transportation, has enjoyed an on-again/off-again parity with the qualified parking component over the past five years. Currently, both allow a participant to spend up to $245 per month under a QTFB plan, with none of it reported as taxable income. After Dec. 31, 2013, the mass transit component will drop back to $130 — adjusted for inflation by IRS — as it was before the current parity provision passed Congress and was signed into law.
A Repeat of the Retroactive Restoration of Parity?
If Congress waits until the middle of 2014, or later, to restore the parity between mass transit and parking benefits — and a pending bill would do just that — many employers would likely have to retrace the steps they took in 2013 when Congress retroactively restored the mass transit/parking parity.
When the mass transit limit dropped to $125 per month in January 2012, some employers saw as a foregone conclusion that Congress would eventually restore the parity, so they kept on administering the $245 limit for mass transit, equal to the limit the IRS set for qualified parking. Those employers turned out to have made a good bet, as Congress did eventually reset the limits at parity.
The employers that followed the letter of the regulations and dropped their plan’s limit for mass transit to $130 (the inflation-adjusted limit that the IRS set for 2012 for mass transit expenses), were allowed to refund the taxes their employees paid as a result of the lower limit. This imposed a considerable cost regarding the time and effort those employers spent in administering their plans (see “Employers Must Act Fast on QTFB-related Tax Refund,” January 2013).
Schumer Champions Parity Again
Sen. Charles Schumer, D-N.Y., on June 7 introduced a bill, S. 1116 — the Commuter Benefits Equity Act of 2013 — which would end the disparity written into the federal tax code permanently and therefore end the need for repeated temporary fixes to maintain parity between parking and mass transit QTFB thresholds. As of press time, S. 1116 had not moved out of its house of origin since its introduction. Meanwhile, Congress is occupied with the national deficit, debt ceiling and the federal budget for the foreseeable future.
In the past five years, Congress three times has extended a temporary legislative fix that set the monthly cap for the two QTFB components equal to each other, but lawmakers have so far failed to make the change permanent.