Purpose

To advise agencies of the proper treatment of qualified parking benefits provided to employees during any given year

Affected Employees

Employees who receive qualified parking benefits from agencies

Background

The IRS issues guidance on an annual basis indicating the maximum monthly excludable amount from gross income for qualified transportation fringe benefits.

Qualified transportation fringe benefits, as defined by the IRS, includes “qualified parking,” using mass transit, commuter highway vehicles, and car pools. Qualified parking is defined as parking provided to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work. It does not include parking at or near the employee’s home.

Parking is provided by an employer if:

• The parking is on property that the employer owns or leases; or
• The employer pays for the parking; or
• The employer reimburses the employee for parking expenses.

If an employer provides an employee with a qualified parking benefit that exceeds the applicable statutory monthly exclusion limit, and the employee does not make any payment, the value of the benefit provided in excess must be included in the employee’s wages for income and employment tax purposes.

OSC Actions

OSC issues the annual Summary of Tax Changes payroll bulletin in late January/early February which communicates the IRS statutory monthly exclusion amount for qualified parking benefits.

Agency Actions

Any qualified parking benefit that exceeds the applicable statutory monthly limit must be added to the employee’s paycheck in Time Entry using the Earn Code TXP (Taxable Parking).

Questions

Questions regarding the tax implications for Qualified Parking Benefits may be directed to the Tax and Compliance mailbox.

Questions regarding deducting Qualified Parking Benefits may be directed to the Payroll Deductions mailbox.