Bicycle Commuter Tax Provision:
Frequently Asked Questions
These WIll be Updated Often As More Information is Available
On January 1, 2009, the qualified bicycle commuting reimbursement was added to the list of qualified transportation fringe benefits covered in section 132 (f) of the Internal Revenue Service Code.
The Bicycle Commuter Act was in front of Congress for seven years, and finally passed as an inclusion to the larger Renewable Energy Tax Credit legislation in 2008. The original intent of the provision was to provide a simple, equitable solution to put cyclists on the same footing as people who receive qualified transportation benefits (QTF)’s for taking transit or driving (or parking, actually) their cars to and from work. It was intended that the bike commuting benefit would be treated the same as the other QTF’s.
The total anticipated cost of the provision, estimated by the Joint Committee on Taxation, is a very modest $1 million per year, as compared to the $4.5 billion annual cost of parking and transit benefits.
Bicycle Commuter Tax Reimbursement Cards
The Leauge developed reimbursement cards to make implementing the Bicycle Commuter Act in your workplace as easy as possible. Simply sign the pledge on the card that states you commuted to work by bike for at least three days per week, and then staple your receipts to the card. Download reimbursement cards for your workplace.
How are companies implementing this benefit?
Companies are finding their own unique ways of implementing this program. At the League we developed a set of monthly reimbursement cards to help track employee commutes. Meredith Corporation developed a set of guidelines to help employees understand the reimbursement program, click here to view their guidelines. To help track employee miles Meredith uses a tracking log.
Are Federal Agencies Implementing the Bike Provision?
On August 12, 2009, the National Indian Gaming Commission published their decision to offer the bike subsidy along with other transportation fringe benefits.
What costs are covered?
The intent of this provision is to help defray some of those fixed costs such as; the purchase of a decent commuter bicycle; bike lock; helmet; bike parking facilities; shower facilities; and general maintenance. The real costs associated with bike commuting are much less than commuting by car but those bike commuters should be able to have help with those costs. Employers might not think this is a huge benefit to them but giving people a little financial incentive is another step in the right direction to build moral.
What is considered a bicycle commuting month?
A qualified bicycle commuting month is any month in which an employee: (I) regularly uses a bicycle for a substantial portion of the travel between his residence and his place of employment, and (II) does not receive any other qualified transportation benefit for such as transit, and parking.
Who is Eligible under Section 132?
As a rule, the qualified transportation fringe benefit can only be provided by employers to employees. Common law employees and officers of corporations are eligible (the law does not include non-discrimination requirements for the benefit). Sole proprietors, partners, independent contractors and two-percent shareholders of S corporations are not eligible for this transportation fringe benefit.
How it Currently Works:
A qualified bicycle commuting reimbursement, means any employer, if they chose to do so, may provide a reimbursement of up to $20 per month for reasonable expenses incurred by the employee in conjunction with their commute to work by bike.
Please note however, that unlike the other qualified transportation fringe benefits, a qualified bicycle commuting reimbursement benefit cannot be funded through employee pre-tax income, nor can an employee receive both the transit and bicycle QTF in the same month. Click here to read in-depth analysis of the bike commuter provision limitations.
(Legal disclaimer: The analysis provided was written by League legal intern Gregory T. Simmons. It was not performed by a lawyer and is provided only for our readers’ interest and information, not as legal advice. Employers, before making any decisions affecting your tax liability, you should consult your accountant or tax legal adviser).
What Can Be Done?
Congressman Earl Blumenauer (D-OR) introduced H.R. 863 on February 4, 2009, to amend the IRS section 132 (f) to allow employees to fund the bike provision through a pre-tax income, as well as allow the use of both the transit and bike benefit it the same month. Click here to see entire bill.
H.R. 863 was referred to the committee on Ways and Means however there has been no action at this time. We will continue to monitor and provide updates for action.
How to Get the Bike Benefit Now?
· First, talk to your employer and tell them you want this benefit. If there are other bike commuters in your office, tell them to speak up too!
· Many employers contract with a Commuter Benefit Provider to coordinate their commuter programs, so have your benefit coordinator call the provider to request enrollment in the bike benefit program. As of April 2009, we have not confirmed any providers who offer the bike benefit other than Accor Services. But other providers are looking to initiate this program, so call and tell them you want it!
· If your employer already contracts with a Commuter Benefit Provider, ask the person who coordinates these benefits to request enrollment in the bike benefit program. If the provider doesn't offer it, find out when they plan to implement it- it's law as of January 1, 2009.
· If your employer prefers to manage the qualified transportation fringe benefits (qtfb) in-house, rather than with a Commuter Benefit Provider, the employer can implement a cash reimbursement program.
· The key point to consider in setting up a cash reimbursement program is that there is a mechanism for the employee to certify that they will commute to work by bike a substantial portion of the month. For example that could mean three days a week for a full time employee and less for a part-time employee. Employers can best determine what works best for their organization. Additionally, employee keeps their receipts for covered expenses and turns them into the employer for reimbursement up to $20 a month or $240 per year.
For More Information:
· RS Publication 15-B (2009), "Employer's Tax Guide to Fringe Benefits" (See Section 2, "Transportation (Commuting) Benefits")
· Edenred Services: Commuter Bicycle Benefit for Employers
The Commuter Benefit is real and in effect- it is the same as all other pre-tax benefits for transit and parking currently available by the IRS. (See Section 2, "Transportation (Commuting) Benefits" of the IRS Publication 15-B (2009), Employer's Tax Guide to Fringe Benefits)
If your company elects to offer this benefit, you can receive up to $20 a month for each month you commute primarily by bike, so long as you don't accept any of the other transit benefit.