coleboy Posted August 13, 2019 Report Share Posted August 13, 2019 Hi, I was wondering if there's any updates on this topic. Has the new law actually passed? Are tax-exempt employers now required to pay income tax on transportation fringe benefits? Any insight is appreciated! Thank you! Link to comment Share on other sites More sharing options...
Luke Bailey Posted August 14, 2019 Report Share Posted August 14, 2019 Well, coleboy, your question is very general, but I think what your talking about is the change to the qualified transportation fringe benefit rules (IRC sec. 132(f)), which was part of TCJA 2017 enacted in 2017 and (this portion) effective 1/1/2018. Generally, tax-exempts and public universities will have a 21% UBI tax, even if they have no other UBTI, for these fringes, unless they include them as taxable in employees' W-2's, which gets complicated. IRS published generous valuation rules at end of 2018 for some that will help limit tax exposure, but does not eliminated. Movement afoot in Congress to repeal this very unpopular provision. BreakfastForDinner 1 Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034 Link to comment Share on other sites More sharing options...
coleboy Posted August 29, 2019 Author Report Share Posted August 29, 2019 Hi Luke, I was unaware of this change until a client brought it to our attention. Of course this client is a tax-exempt client so was worried about the tax consequences. They currently have a fringe benefit plan that allows for employees to pay for their transportation expenses on a pre-tax basis. They are considering stopping the plan because of these new rules. Can you point to these "generous valuation rules"? Their plan was in place during 2018 so I'm wondering if they paid the tax. Thank you. Link to comment Share on other sites More sharing options...
Luke Bailey Posted August 29, 2019 Report Share Posted August 29, 2019 coleboy, IRS Notice 2018-99. Very generous if your employees park on premises you own. Good luck. Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034 Link to comment Share on other sites More sharing options...
GBurns Posted November 10, 2019 Report Share Posted November 10, 2019 I found this Summary which explains IRS Notice 2018-99 from the employer's perspective in simpler terms. https://www.thetaxadviser.com/issues/2019/apr/qualified-transportation-fringe-benefit-loss-deduction-tax-reform.html I seems that employees can no longer use salary reduction to reduce their costs. I thought that TCJA meant "Tax Cut", as in Reducing Taxes but in many cases I am seeing a Tax Increase. Removing the pre-tax benefit eliminates this tax deduction for employees and reducing the deductability as an expense is an increase in taxation for the employer. George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction) Link to comment Share on other sites More sharing options...
Luke Bailey Posted December 26, 2019 Report Share Posted December 26, 2019 On 11/9/2019 at 11:22 PM, GBurns said: I found this Summary which explains IRS Notice 2018-99 from the employer's perspective in simpler terms. https://www.thetaxadviser.com/issues/2019/apr/qualified-transportation-fringe-benefit-loss-deduction-tax-reform.html I seems that employees can no longer use salary reduction to reduce their costs. I thought that TCJA meant "Tax Cut", as in Reducing Taxes but in many cases I am seeing a Tax Increase. Removing the pre-tax benefit eliminates this tax deduction for employees and reducing the deductability as an expense is an increase in taxation for the employer. FYI, last week Congress repealed the "parking tax" for tax-exempt and state university/college employers, effective back to 1/1/2017 (so as if never applied, except for all the spilt ink). No change for taxable. Section 302 of the Further Consolidated Appropriations Act, 2020, H.R. 1865. Page 1769 of the 1770 page bill accessed through this link. SEC. 302. REPEAL OF INCREASE IN UNRELATED BUSINESS 12 TAXABLE INCOME FOR CERTAIN FRINGE BEN13 EFIT EXPENSES. 14 (a) IN GENERAL.—Section 512(a) is amended by strik15 ing paragraph (7). 16 (b) EFFECTIVE DATE.—The amendment made by this 17 section shall take effect as if included in the amendments 18 made by section 13703 of Public Law 115–97. Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034 Link to comment Share on other sites More sharing options...
TPApril Posted January 28, 2021 Report Share Posted January 28, 2021 Can parking costs be deduced from payroll on a pre-tax basis? Is there a limit? If so, is it required to be part of a FSA? Link to comment Share on other sites More sharing options...
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