Rules updated for transit fare smart cards and qualified transportation fringe benefits
 

Rules updated for transit fare smart cards and qualified transportation fringe benefits

In response to changes in the availability of electronic payment media on transit systems, the IRS announced that, beginning after Dec. 31, 2015, employers will no longer be permitted to provide qualified transportation fringe benefits in the form of cash reimbursement in geographic areas where a terminal-restricted debit card is readily available. After that date, the IRS will no longer permit employers to use cash reimbursement if the only available voucher or similar item exchangeable for a transit pass is a terminal-restricted debit card.

Two years ago, the IRS asked for comments on the use of smart cards and debit cards to provide qualified transportation benefits as the use of electronic media in transit systems became more widespread (see earlier coverage here). Rev. Rul. 2014-32 modifies and supersedes Rev. Rul. 2006-57 by describing eight situations involving transportation benefits and whether they qualify to be excluded from income under Sec. 132. read more on the Journal of Accountancy.