Proposed Regulations for Qualified Transportation Fringe Benefits

On June 19, 2020, the Internal Revenue Service (IRS) issued proposed regulations under a portion of the 2017 Tax Cuts and Jobs Act that eliminated the employer deduction for certain employee transportation benefits.

The Tax Cuts and Jobs Act changed Section 274 of the IRS Code to disallow employer deductions for qualified transportation fringe expenses, including:

  • Transportation in a commuter highway vehicle between the employee’s residence and place of employment;
  • Transit passes;
  • Qualified parking; and
  • Qualified bicycle commuting reimbursement.

The proposed regulations provide methodologies to determine the amount of qualified transportation fringe parking expenses that are nondeductible. The proposed regulations also include definitions and special rules for the calculations underlying the methodologies.

The deadline for written or electronic comments and requests for a public hearing is August 24, 2020. The IRS is recommending commenters to submit public comments electronically at https://www.regulations.gov/.

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