Commuter Services informal workshop on Employee Commuting Benefits

Uncle Sam had some surprises in store for employers with the unveiling of the Tax Cuts and Jobs Act (HR 1) at the end of 2017.  As a result, many transportation fringe benefits provided by employers to employees will be treated differently. 
The new tax law disallows For-Profit employers from counting transportation benefits as a business deduction.  Further, the new law collects revenue from Non-Profit employers by treating transportation fringe benefits as Unrelated Business Taxable Income (UBTI), and applies a 21% tax. 
In the past, Commuter Services encouraged employers to either subsidize, or allow for pre-tax/salary reduction payment, of some, or all of the specified employee commuter expenses (e.g. Section 132(f) of the IRS tax code). These commuter costs include transit passes, vanpool expenses and bicycle commuting expenses. 
In 2018, employers will have to closely examine the new tax consequences of these programs.  Given the 2017 tax law reduces the corporate tax rate from 35% to 21%, and given the popularity of employee transportation benefits, we encourage you to keep these commuter programs in place.
The changes are most impactful for Non-Profit organizations.  In order to continue transportation benefits, they will have to choose whether to 1. Treat these benefits as UBTI, and be taxed 21%, or 2. Provide employees with taxable income sufficient to keep the benefit in place. 
Of particular note, the IRS has stated intent to treat pre-tax/salary reduction transportation benefits as UBTI; a tax policy which has been recently confirmed by the national Association for Commuter Transportation (ACT) with leaders at the Department of Treasury. 
There is also an unresolved issue of how parking expenses, including the provision of free parking, will be treated under the new law.