News Flash: Details Of Tax-Free Transportation Plans Debated

At a hearing in Washington, D.C., earlier this month, the Internal Revenue Service heard opposing arguments on permitting employers to provide tax-free public transit benefits through cash reimbursement rather than vouchers or passes. As we’ve reported, proposed IRS rules would make it easier for employers to set up transportation spending accounts, which let you pay up to $240 of an employee’s monthly commuting costs without including the benefits in the employee’s taxable income. But companies would be permitted to offer cash reimbursement only if transit passes or vouchers aren’t readily available for direct distribution by the employer. During the hearing, public transit groups complained that allowing employers to reimburse workers with cash could lead to abuses. We’ll keep you posted on further developments on the IRS’ new transportation-plan rules.