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August 20, 2010
Voucher and Transit Pass Reimbursement

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 the policies relating to voucher and transit pass reimbursements.

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  • If a voucher or transit pass is "readily available," an employer cannot provide cash reimbursements to employees to buy their own vouchers or transit passes. Instead, the employer must purchase the vouchers or transit passes and distribute them to employees.
  • A voucher is readily available if an employer can obtain it on the same or better terms as an individual employee and without incurring a significant administrative cost. Administrative costs relate only to fees paid by the employer to transit providers.
  • The Internal Revenue Service (IRS) has adopted a regulation under which administrative costs are treated as significant if the average monthly administrative costs incurred by the employer for the lowest cost voucher are more than 1 percent of the average monthly value of the vouchers, excluding delivery fees of up to $15 (IRS Reg. Sec. 1.132-9, Q/A-16).

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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