Using debit cards for tax-free transportation benefits

✍ Scribed by Shirley Dennis-Escoffier

• Book ID: 102297024
• Publisher: John Wiley and Sons
• Year: 2007
• Tongue: English
• Weight: 43 KB
• Volume: 18
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/jcaf.20314

✦ Synopsis

In late 2006, the IRS released guidance for employers on the use of smartcards or debit cards to provide tax-free transportation fringe benefits to their employees. Qualified transportation fringe benefits offer tax savings for both employers and employees; employers avoid payroll tax liability and employees avoid taxable income. In this ruling, the IRS provides three examples of situations that will qualify for tax-free benefits and one situation that will not. Employers who want to encourage their employees to use mass transit should pay attention to this ruling because it illustrates how to provide commuting benefits to employees on a tax-free basis with a minimum of paperwork.