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August 19, 2010
Transportation Fringe Benefits and Tax Exclusions

In a BLR webinar entitled "Mileage/Commuting Expenses: How to Avoid Big Mistakes With These Employee Expenses," Mark E. Tabakman, Esq., partner in the nationwide law firm Fox Rothschild, LLP and Stacy Wade, Ph.D., CPA, assistant professor of accounting at Western Kentucky University, explained that an employer may offer an employee a choice between a fixed amount of cash compensation at a specified future date or a fixed amount of any qualified transportation fringe (other than a qualified bicycle commuting reimbursement) to be provided for at a specified future period without losing the exclusion of the qualified transportation fringe benefit from income and employment taxes.

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The election must be irrevocable after the beginning of the period for which the qualified transportation fringes will be provided and must be in writing or in another permanent and verifiable form, such as electronic. The election must relate to a fixed dollar amount of fixed percentage of compensation reductions and must include the following:

  • Date of election
  • Amount of the compensation to be reduced
  • Period for which the benefit will be provided
  • Election must relate to a fixed dollar amount or fixed percentage of compensation reduction (an election to reduce compensation for a period by a set amount for such period may be automatically renewed for subsequent periods)

Mark E. Tabakman, Esq., is a partner in the nationwide law firm Fox Rothschild, LLP (www.wagehourlaw.foxrothschild.com). He advises clients throughout the country on all aspects of labor relations and employment law, as well as the development of corporate employment policies. Stacy Wade, Ph.D., CPA, is assistant professor of accounting at Western Kentucky University (www.wku.edu). She teaches undergraduate and graduate courses in financial accounting and taxation.

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