IRS Allows Advance Distribution of Transit Passes


Employers now can distribute tax-free mass-transit passes to their employees more than one month in advance. IRS Announcement 2000-78 changed the distribution requirement in proposed regulations that would have exempted transit passes from taxes only for the month in which they were actually distributed to employees.

Employers now may distribute transit passes (valued at $65 per month for 2001), as qualified transportation fringe benefits, for more than one month without negating the tax-free status of the passes. For example, an employer may distribute transit passes quarterly. However, if the employee holding advance passes terminates his or her employment before using all of them, and the employer does not recover their value, the employee will be liable for taxes on the remaining passes.

SPONSORED REPORT

2018 financial reporting survey: Challenges and trends

Learn the top reporting challenges that emerged in a survey of more than 800 finance, accounting, and compliance professionals across the world, and compare them with your organization's obstacles.

PODCAST

How the skill set for today’s CFO is changing

Scott Simmons, a search expert for large-company CFOs, gives advice for the next generation of finance leaders and more, including which universities are regularly producing future CEOs and CFOs.