Qualified Parking after TRA '97

[Guest kp]

After TRA '97 employers are now permitted to pay parking benefits in lieu of compensation to employees. I have heard that the IRS prefers that the employee make an election at the beginning of the year based on how much he expects the month to month parking expenses to be. May the employee avoid making an election without violating any constructive receipt rules?

What if it is not feasible to make the election? One company has employees who park all over the city. The easiest way to administer under the new rules to have the employee first incur the expense, then have the EE turn in the receipt for a pretax deduction in the following month.

EX:

Jan. $100 expense incurred for parking.

Feb. EE turns in receipt for $100 to ER who then takes a pretax deduction for that amount from the EE's paycheck, and also a $100 reimbursement to net pay (since the EE has already paid his own money to pay for the parking).

ER cannot set up monthly parking with the garages for all of its EEs since there are so many EEs and so few large blocks of parking available within walking distance of the ER.

Also, the expenses for monthly parking may easily change from month to month. Can we cross over months to take the pretax deduction? We most likely cannot cross over years.

Any problems with this type of administration of the new "in lieu of" parking benefits?