APA Vies for Permanent By William Dunn, CPP
Parity for Commuter Benefits
The American Payroll Association has urged Congress to address the disparity in employer-provided commuter benefits in letters to the Senate Finance Committee and House Ways and Means Committee. Currently, parking benefits may be offered on a pretax basis up to $250 per month, while transit benefits are capped at $130 per month. The benefits must be renewed each year.
In December 2014, it looked as though APA had been successful in convincing Congress of the need to apply parity to the two commuter benefits plans. Moving into the final days of the 113th Congress, it appeared that Congress would raise the commuting benefit cap to $250 and extend that for two years, through 2016. The deal fell through on the last day, and although the cap was indeed raised, it was applied retroactively to January 2014, precisely what APA had asked Congress to avoid.
Now APA is asking the 114th Congress to once again apply parity to the benefits and to apply it prospectively and permanently so that we might avoid this scenario in future years:
"Retroactive application is one of the most difficult aspects to administer for both employers and the employees using the benefit. Many employees will not have the opportunity to recoup the missed benefits from months past, making the retroactive application irrelevant. For those that do have the opportunity, employers must adjust the employees' tax withholding, which can be complicated and expensive. Therefore, we support applying any adjustments prospectively -- starting when the legislation is enacted and continuing on a permanent basis."
APA is working within a larger coalition of 52 organizations, called Commuter Benefits Work for Us. The coalition noted to Congress that, in September 2014, the Joint Committee on Taxation issued a statement saying that setting both parking and transit benefit caps at $235 per month would generate a net revenue increase of $131 million over the next 10 years. The coalition suggested that those funds could be applied to the Highway Trust Fund.
While the APA's overriding interest in commuter benefits is to eliminate the administrative burden and uncertainty that comes with having benefit parity renewed each year, the coalition as a whole has varied interests in commuter benefits, ranging from ecological to economic.
The coalition said, "Public policy and the tax code should not penalize commuters for use of transit and vanpools versus driving to work. Congress' failure to permanently extend this important tax policy constitutes an increase in taxes every time they expire and sets a policy that fails commuting Americans. In addition, uncertainty in the monthly deduction level for the transit benefit from year-to-year creates administrative burdens for both employers and users of the benefit that makes the program difficult to manage. Lastly, instability in the benefit also hurts public transportation systems and municipalities directly with fluctuations in ridership and decreases in overall demand."
The Congress is now enjoying its summer break and will return after Labor Day to tackle, among other legislation, the host of expiring tax provisions. The tax extender bill being prepared by the Joint Committee on Taxation addresses commuter benefits by extending the benefits for tax years 2015 and 2016 and capping both parking and transit benefits at $250 per month.