The purpose of this section is
to advise State agencies of Federal tax law concerning employer-provided
QUALIFIED TRANSPORTATION FRINGE BENEFITS
Benefits categorized as
Qualified Transportation Fringe Benefits are
excludable from gross income.
1. Qualified transportation fringe benefits are applied
on a monthly basis. If the value of the benefit does
not exceed the statutory limit in any month, the unused
portion of the exclusion may not be carried over to
2. Employers that make cash reimbursements to employees
must ensure that their employees have, in fact, incurred
expenses for parking, transit passes or transportation
in a commuter highway vehicle.
1. The value
of parking provided to an employee excludable from income (the Federal statutory rate) is determined annually. The 2007 rate is $215 per month. A G Bulletins is issued annually providing the applicable Federal statutory rate for theyear.
2. The Federal statutory rate cap applies, and amounts
in excess of the cap must be included in wages, when
an employer provides parking on its own property, pays
someone else to furnish employee parking, or reimburses
employees for the cost of parking in a garage or lot
(including a park-and-ride lot).
3. Employer-provided parking at or near the employees
residence is fully includable as income. The rate cap does not apply.
4. The following are IRS rules for determining the
value of parking:
A. For employer-provided parking, the amount includable
in wages is the amount by which the monthly value
exceeds the sum of the amount excludable (the Federal
statutory rate) plus any payments by the employee.
Employer P provides qualified
parking with a fair market
value of $225 per month
to its employees, but
charges the employees $25
per month. Because the
amount paid by the employees
($25) plus the amount excludable
for qualified parking
($215 for 2007) equal the
fair market value of the
benefit, no amount is includable
in the employee's gross
B. The monthly value of parking provided by an employer
to an employee is based on the cost (including taxes
and other added fees) that an individual would incur
in an arm's-length transaction to obtain parking at
the same site. If that cost is not ascertainable,
then the value of parking is based on the cost that
an individual would incur in an arm's-length transaction
for a space in the same lot or a comparable lot in
the same general location under the same or similar
C. The monthly value of employer-provided parking
is based on the right of access, and not on the actual
use of the parking by the employee.
EXAMPLE 1: Employer V maintains a parking lot for
its employees. V requires its employees to apply for
parking spaces prior to the month in which the space
is to be used. V distributes a monthly parking pass
to each employee who applies to park, and does not
allow anyone without a pass to park in its lot. No
value is includable in the gross incomes of employees
who do not receive parking passes because they do
not have access to employer-provided parking. The
value of parking provided to employees who receive
passes is the full monthly value.
EXAMPLE 2: Employee D has unlimited access to qualified
parking provided by Employer M. During one particular
month, D used the parking space 5 days, because D
was away on business travel for one week and on a
personal vacation for two weeks. Because D had access
to the parking space for the entire month, the amount
includable in D's gross income is the amount by which
full monthly fair market value exceeds the Federal
D. The monthly rate for a parking space may be used
to determine a monthly value, rather than the daily
rate multiplied by the number of days in the month.
If an annual rate is available, the monthly rate may
be determined by dividing the annual rate by twelve.
If a space is available for less than a month, the
space may be valued using the daily rate multiplied
by the number of days the employee has access to the
space. In no case is it necessary, however, for the
monthly value to exceed the monthly rate. The rates
described above may only be used if they are available
to the general public.
Employer-Provided Commuter Highway Vehicle Transportation
and Transit Passes
Up to $110 per month (2007 rate - Review current
'G' bulletins to determine the applicable Federal Statutory
rate), is not includable in income if it is for combined commuter
highway vehicle transportation and transit passes.
Employer-Provided Transportation Between Residence
and Work in a Commuter Highway Vehicle
Such transportation is excludable providing it is in a vehicle which meets certain requirements,
including the following:
1. Vehicle must seat at least six passengers and a
2. Vehicle is reasonably expected to be used 80% of
the time to transport at least three employees at once
(plus the driver).
transportation between residence and work is taxable.
The portion of transportation
fringe benefits which are taxable must be included in
the wages of the affected employees.
Instructions for reporting qualified
transportation fringe benefits which exceed statutory
limits are issued in Payroll Bulletins.
Agencies should periodically
review employer-provided transportation benefits to determine
whether any employees are affected by these provisions
of the Federal Tax Code. If so, notify the Accounting
Information Center at (518) 473-1170. OSC will then provide
those agencies with further instructions.