Publication 15 B - Employer'S Tax Guide To Fringe Benefits

tation, such as commuting to and from work. These rules

Transit pass. A transit pass is any pass, token, farecard,

apply to the following transportation benefits.

voucher, or similar item entitling a person to ride, free of

charge or at a reduced rate, one of the following:

•

De minimis transportation benefits.

•

Mass transit.

•

Qualified transportation benefits.

•

In a vehicle that seats at least 6 adults (not including

Special rules that apply to demonstrator cars and qualified

the driver) if a person in the business of transporting

nonpersonal-use vehicles are discussed under Working

persons for pay or hire operates it.

Condition Benefits, later.

Mass transit may be publicly or privately operated and

includes bus, rail, or ferry.

De Minimis Transportation Benefits

Qualified parking. Qualified parking is parking you pro-

You can exclude the value of any de minimis transportation

vide to your employees on or near your business premises.

benefit you provide to an employee from the employee’s

It also includes parking on or near the location from which

your employees commute to work using mass transit,

wages. A de minimis transportation benefit is any transpor-

commuter highway vehicles, or carpools. It does not in-

tation benefit you provide to an employee that has so little

clude parking at or near your employee’s home.

value (taking into account how frequently you provide

transportation to your employees) that accounting for it

Employee. For this exclusion, treat the following individu-

would be unreasonable or administratively impracticable.

als as employees.

For example, it applies to occasional transportation fare

you give an employee because the employee is working

1) A current employee.

overtime, if the benefit is reasonable and is not based on

2) A leased employee who has provided services to

hours worked.

you on a substantially full-time basis for at least a

year if the services are performed under your pri-

Employee. For this exclusion, treat any recipient of a de

mary direction or control.

minimis transportation benefit as an employee.

Exception for S corporation shareholders. Do not

Qualified Transportation Benefits

treat a 2% shareholder of an S corporation as an employee

of the corporation. A 2% shareholder is someone who

This exclusion applies to the following benefits.

directly or indirectly owns (at any time during the year)

more than 2% of the corporation’s stock or stock with more

1) A ride in a commuter highway vehicle between the

than 2% of the voting power.

employee’s home and work place.

2) A transit pass.

Relation to other fringe benefits. You cannot exclude a

qualified transportation benefit you provide to an employee

3) Qualified parking.

under the de minimis or working condition benefit rules.

However, if you provide a local transportation benefit other

The exclusion applies whether you provide one or a combi-

than by transit pass or commuter highway vehicle, or to a

nation of these benefits to your employees.

person other than an employee, you may be able to ex-

Qualified transportation benefits can be provided di-

clude all or part of the benefit under other fringe benefit

rectly by you or through a bona fide reimbursement ar-

rules (de minimis, working condition, etc.).

rangement. However, cash reimbursements for transit

passes qualify only if a voucher or a similar item that the

Exclusion from wages. You can generally exclude the

employee can exchange only for a transit pass is not

value of transportation benefits you provide to an em-

readily available for direct distribution by you to your em-

ployee during 2002 from the employee’s wages up to the

ployee. A voucher is readily available for direct distribution

following limits.

only if an employee can obtain it from a voucher provider

that does not impose fare media charges or other restric-

1) $100 per month for combined commuter highway

tions that effectively prevent the employer from obtaining

vehicle transportation and transit passes.

vouchers. See Regulation section 1.132-9 for more infor-

2) $185 per month for qualified parking.

mation.

You can exclude qualified transportation fringe benefits

Benefits more than the limit. If the value of a benefit

from an employee’s wages even if you provide them in

for any month is more than its limit, include in the

place of pay.

employee’s wages the amount over the limit minus any

amount the employee paid for the benefit. You cannot

Commuter highway vehicle. A commuter highway vehi-

exclude the excess from the employee’s wages as a de

cle is any highway vehicle that seats at least 6 adults (not

minimis transportation benefit.

including the driver). In addition, you must reasonably

expect that at least 80% of the vehicle mileage will be for

More information. For more information on qualified

transporting employees between their homes and work

transportation benefits, including van pools, and how to

place, with employees occupying at least one-half of the

determine the value of parking, see Regulation section

vehicle’s seats (not including the driver’s).

1.132-9.

Page 15

Publication 15 B - Employer'S Tax Guide To Fringe Benefits - 2002 Page 15

Related Articles

Related forms

Related Categories