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The Bicycle benefit took effect in January 2009. See below for information on how to implement it. Click here for how some employers are providing a bicycle subsidy.
The $20 taxable fringe benefit is a reimbursement amount of up to $20 that is tax deductible but must be backed up by receipts for costs incurred for bicycle commuting: "purchase, maintenance, repair and storage expenses related to commuting."
It is not $20 just for riding your bicycle to work. At this time the benefit cannot be used in conjunction with parking or transit tax benefits so if you are riding your bike to a transit station and taking transit the rest of the way it may be more beneficial to take the transit tax benefit .Here is a link to a Taxable Fringe Benefits Guide from the IRS. The bicycle benefit description is under the Qualified Transportation Fringe Benefits section. http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf
The Emergency Economic Stabilization Act of 2008 : H.R. 1424 (bailout) bill signed into law by President Bush includes expanding IRS' taxable fringe benefits (Section 132(f) ) to allow up to $20.00 per month for bicycle commuters. You can find the full bill (HR 1424) at http://thomas.loc.gov/
See IRS' Taxable Fringe Benefit Guide http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf for more information about Qualified Transportation Fringe Benefits (Section 132(f)). For most employees, those who ride transit or commuter highway vehicles (e.g., vanpool) can receive up to $115.00 per month tax free. They can also receive $220.00 per month tax free for qualified parking.
A provision in the final bill language says that if a commuter receives a benefit for transit or parking, he or she is unable to receive the bike benefit....vis a vis, you can not combine bike/transit or transit/parking. The language does not undo previous guidance that says parking and transit can be combined. It specifically exempts the bike benefit being combined.
SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS.
(a) In General- Paragraph (1) of section 132(f) is amended by adding at the end the following:(b) Limitation on Exclusion- Paragraph (2) of section 132(f) is amended by striking `and' at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting `, and', and by adding at the end the following new subparagraph:
- `(D) Any qualified bicycle commuting reimbursement.'.
(c) Definitions- Paragraph (5) of section 132(f) is amended by adding at the end the following:
- `(C) the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.'.
- `(F) DEFINITIONS RELATED TO BICYCLE COMMUTING REIMBURSEMENT-
- `(i) QUALIFIED BICYCLE COMMUTING REIMBURSEMENT- The term `qualified bicycle commuting reimbursement' means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee's residence and place of employment.
- `(ii) APPLICABLE ANNUAL LIMITATION- The term
`applicable annual limitation' means, with respect to
any employee for any calendar year, the product of $20
multiplied by the number of qualified bicycle commuting
months during such year.
- `(iii) QUALIFIED BICYCLE COMMUTING MONTH- The term
`qualified bicycle commuting month' means, with respect
to any employee, any month during which such employee--
- (I) regularly uses the bicycle for a substantial
portion of the travel between the employee's
residence and place of employment, and
- (II) does not receive any benefit described in
subparagraph (A), (B), or (C) of paragraph (1).'.
-
(d) Constructive Receipt of Benefit- Paragraph (4) of section
132(f) is amended by inserting `(other than a qualified bicycle
commuting reimbursement)' after `qualified transportation fringe'.
(e) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.
You may also be interested in IRS' ruling in 2006 http://www.irs.gov/irb/2006-47_IRB/ar05.html about when and how employer-provided transportation benefits provided through smartcards, debit or credit cards, or other electronic media are excluded from gross income under �� 132(a)(5) and 132(f) of the Internal Revenue Code and from wages for employment tax purposes. back to top
Implementing the Bicycle Benefit of Qualified Transportation Fringe Benefits
We should expect to see IRS guidance on how this will be implemented but we can look to the existing guidance http://www.irs.treas.gov/pub/irs-regs/td8933.pdf. Consult your tax professional for guidance.
The Bicycle Benefit is not a tax deduction. Like the rest of Section 132(f), employers are permitted (not required) to allow employees to seek reimbursement of up to $240 per year (assuming they regularly bike to work for all 12 months). Assume the employer cannot offer reimbursement for bicycle commuting to an employee that already accepts a parking and/or transit subsidies. An employer can choose to offer less than $20 per month. Assume that the individual will have submit some receipts for reimbursement. Where the line is drawn as to what is reimbursable will have to be decided – e.g., bike helmets, lights, tires, routine maintenance, etc.
Clearly, terms like “regularly uses” and “substantial portion” need to be clarified. It now says: "(I) regularly uses the bicycle for a substantial portion of the travel between the employee's residence and place of employment." While qualified transportation fringe benefits for commuter highway vehicles (e.g., vanpools) have a 80% use for commuting requirement, transit does not. Is “regularly uses” calculated on a monthly basis or yearly basis? For example, if someone biked to work 9 months of the year and rode transit 3 months of the year, would they be eligible for 12 months of reimbursement (75% of available days could be considered “regular”) or 9 months?
The Benefit is labeled as a “reimbursement program”. Like the current 132(f), employers can not pre-pay. Current guidance says “A payment made before the date an expense has been incurred or paid is not a reimbursement.” This may mean that a person who purchases a bike in January with the intent to use it for commuting for the next 12 months, he or she may not get the full reimbursement amount (e.g., $240) in the first month.
This requirement “does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).” excludes people who are already receiving a transit, commuter highway vehicle or parking benefit. I interpret this as meaning that the employee has to choose one or the other (transit/commuter highway vehicle/parking benefit OR bicycle benefit). This clause is in contrast to the current law that allows employees to combine parking and transit tax free amounts (e.g., cost of parking at a rail station and the rail fare). It wouldn’t appear that the new bicycle benefit will be an additional sweetener for a bike-to-bus or bike-on-bus programs if transit subsidies are provided.
Another point - the monthly transit/vanpool and parking limits are subject to cost of living increases (increase in $5 increments if the cost of living is high enough). While this has caused parking to increase more than transit based on the current level, this also would mean that bicycle limits are unlikely to change (the $20 per month basis is too low for the $5 increment to kick in automatically.
How employers (public and private) are providing subsidies to bicycle commuters
- Clif Bar & Company (in Berkeley) To help employees get out
of their cars and onto to their bikes for their commutes, Clif Bar &
Company (in Berkeley) will provide employees who agree to commute by
bike two days a month with up to $500 for the purchase of a commuter
bike or to make commute-related retrofits to their existing
bike.http://www.clifbar.com/uploads/press_downloads/2008/ClifCoCoolHomeCoolCommute051908.pdf
Source: Susan Heinrich, 511 Rideshare & Bicycling Coordinator, Metropolitan Transportation Commission
- Marin County, one of the largest employers in the SF Bay Area,
has implemented a stipend as part of its Green Commute Program in
response to concerns about traffic congestion and greenhouse gas
emissions. The County offers $4 a day to regular and extra hire
employees who get to work without using a single occupant motor
vehicle. Regular and extra hire employees who participate in the
Green Commute Program by walking, bicycling, car or vanpooling, or
riding transit for their trip to work are eligible for the $4 a day
stipend.
http://www.co.marin.ca.us/depts/pw/main/green_commuting.cfm
Source: Susan Heinrich, 511 Rideshare & Bicycling Coordinator, Metropolitan Transportation Commission
- 511 Contra Costa has managed a bicycle to work program for the past two years. One of the goals has been to motive persons to include riding their bicycle “the last mile” in conjunction with transit. Our program; the Bicycle Commuter Assistance Program, takes about 15 novice bicyclists, provides them with League of American Bicyclists “Road One” training, a helmet, lock and bicycle tune-up if needed and asks them to ride their bicycle to work, with a transit link if possible 2-3 days a week. The program runs from about May through September. We incentivize participants by providing theme with refunds for their transit use and .52 cents for every mile they ride their bicycles to work up to $200.00 a month. We ask them to complete monthly diaries of their daily bicycle commute. Both years we have had over 100 applications for the program. This year 13 out of 14 participants completed the program. We plan to grow this program in the following years. Our goal is to have at least two classes of 15 participants next year. Source: Matt Wood, Project Manager, 511 Contra Costa
- David Evans and Associates in Portland provides employees $1 for
each day that they commute by bike. Chris King Precision Components
provides extra vacation days for folks who ride to work.
Source: Steve Hoyt-McBeth, SmartTrips Project Manager, Portland Office of Transportation
- Many state agencies in Washington offer a taxable $1/trip to
their employees who bicycle to work as part of their CTR subsidy
program. It is the same amount offered for carpooling and walking.
Source: Joan Cullen, State of Washington back to top
Commuter Choice Initiative expands options for employers to subsidize transit
The Commuter Choice Initiative allows employers to provide greater commute benefits. Described in Title IX, section 910 of TEA-21, this initiative changes IRS code, section 132(f)(4) to allow pre-tax payment of transit, vanpool or parking costs.
Qualified Transportation Fringe Benefit. For taxable years beginning in 2007, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $110. The monthly limitation regarding the fringe benefit exclusion amount for qualified parking is $215. [http://www.irs.gov/formspubs/article/0,,id=109879,00.html]
Employees may set these amounts aside tax-free in an account. The account is different from traditional cafeteria plans, no plan filings are required and an employee does not lose any unused amount they have set aside.
The pre-tax and tax-free benefits do not apply to carpooling costs and the law requires that employers use a debit system or vouchers such as TransitChek (the phone number for TransitChek is 1-800-531-2828).
The savings add up. For every dollar employers provide, they save up to ten cents; employees save 30 cents.
The TMA recommends that you consult your tax specialist on setting up these pre-tax accounts.
EPA
recognizes TMA
members' efforts to ease traffic
Twenty-two of the 46 Greater Sacramento employers on the U.S. Environmental Protection Agency's new "Best Workplaces for Commuters"
list are Sacramento TMA members. Companies on the list must offer financial incentives significant enough to get 14 percent of their employees
to use commute alternatives (car or vanpool, transit, bicycling, or walking to
work).
"Best Workplaces for Commuters is a national standard of excellence," said Robin Snyder, the EPA's team manager for the commuter program. "These employers are the top tier nationally. They're making real, measurable contributions to improving air quality and reducing congestion."
The EPA developed its first "Best Workplaces" list in the Bay Area last year, and has since completed lists in Washington, D.C., Houston and Tucson, Ariz. By recognizing these employers, the EPA hopes to cut down on the number of cars on the road and improve air quality.
Sacramento was an obvious next choice because of its proximity to the Bay Area and because the region is in violation of federal Clean Air Act standards for ozone. It's also one of the more difficult commuting markets in the country.
More than 800,000 people commute each day in the Sacramento region, according to the U.S. Census, and 75 percent of them drive to work alone. A 2000 transportation model used by the Sacramento Area Council of Governments concluded that the average Sacramento commuter drives 22.9 miles per day and spends 15 percent of that drive time on highly congested roads.
And a recent study by Demographics Monthly concluded that Sacramento-area drivers have a longer commute than drivers in 678 other metropolitan areas in the country. The study included in the Sacramento metropolitan area Truckee, Grass Valley and Douglas County, Nev., across the Sierra from Alpine County.
Stockton and the Bay Area rated even worse in the study.
Employers have 18 months from the time their name appears on the list to survey the commuting habits of their employees to make sure they're meeting the goal of having 14 percent of their employees commute by means other than driving alone.
TDM Training: Helping employees find commute options requires many talents
If we had to choose a performer that best characterized the Employee Transportation Coordinator function, would it be a juggler, clown, stand-up comedian or country western singer? My guess is the juggler, and not just any ordinary run-of-the-mill-juggling-three-balls-at-a-time juggler. Ours would be juggling bottles, hats and balls while precariously perched atop a high wire. It feels this way when we have to balance and juggle our many work and family responsibilities daily.
Every ETC in the Sacramento TMA wears more than one hat, sometimes the other jobs are related, such as managing employee parking or the fleet of vehicles, other times the majority of the ETC’s time is spent on very unrelated work, from managing the office, providing support services, to analyzing data.
However, it is interesting to note that it’s not a full-time ETC, a big budget or expensive incentives that make the employee transportation programs work. It is the enthusiasm, commitment and resourcefulness of the person that does the job that makes the programs successful.
Recognizing this, the Sacramento TMA’s programs are designed to support the members’ efforts and make the time the ETC can devote to the job be the most effective. TMA programs demand as little of the members’ staff time as possible. The TMA manages the programs, analyzes the data and reports the results.
To help the ETCs, the Sacramento TMA provides training and networking at every monthly meeting. The purpose of the training is to show ETCs how to offer the TMA’s programs and help employees find commute options. The training includes ideas, techniques, information and resources to implement programs, as well as case studies of various employers that have successful carpool and vanpool programs.
The training is designed for both veteran and novice ETCs. Carpool program basics are addressed, including defining a carpool, benefits of carpooling, how to get management support for a carpool program and how to address concerns about carpooling.
Other topics covered in the training include getting employees interested in carpooling, keeping track of carpools, and using the TMA’s Guaranteed Ride Home program to support a carpool program.
By supplying the tools to implement successful commute option programs at the worksite, we hope TMA training will give members more time to juggle the myriad of other things they have to do!
City Parking
Garages offer Alternative Mode Commuter Option (AMCO)
AMCO is a discount parking program available to individuals who work in the downtown area and commute by transit, carpool, bicycle, but occasionally drive alone to work. AMCO passes can save you nearly 50% off the cost of all-day parking.
AMCO participants can park in Memorial Garage, Old Sacramento Garage, Tower Garage, City Hall Garage, Capitol Garage, Downtown Plaza West Garage, and Downtown Plaza East Garage.
To purchase the AMCO passes, bring your valid California driver's license to the City of Sacramento Parking Facilities office at 915 I Street, Room 1214. A set of 12 all-day discounted passes will be issued. AMCO passes are valid for 12 months from the date of issuance. A maximum of 12 discounted passes can be purchased per customer per quarter. Each set costs $78 for all designated facilities and $96 for Capitol Garage.
For enrollment and application, see Forms (AMCO application).
Click here for an excellent map of City garages.
