Bicycles Added To Qualified Transportation Fringes
As Monty Python would say, now for something completely different. I usually write about retirement or health plans but this particular benefit caught my eye. As of October 3, 2008, a bicycle commuter benefit is added to IRC 132(f), meaning employers can reimburse certain expenses for employees who commute to work via bicycle and the amounts of the reimbursement are excluded from gross income.
Employees may be reimbursed on a tax-free basis for "reasonable expenses" incurred by the employee during the calendar year for the purchase of a bicycle, bicycle improvements, repair and storage provided the bicycle is regularly used to travel between work and the employee's residence. An employee is considered a bicycle commuter if he or she uses the bicycle during any month for a "substantial portion" of their commute. Of course there is no definition in the code of "substantial portion" or "regularly used" so employers are expected to use their own interpretations of those terms.
The employer may reimburse the employee up to $20 per month for each month of the year that the employee qualifies as a bicycle commuter (that is regularly uses for a substantial portion), but the employee may not receive any bicycle commuter benefits in the same month as he or she receives any other qualified transportation benefits (such as transit passes or parking reimbursement). The reimbursement may be paid any time during the year in which the employee commuted by bicycle, or within 3 months after the end of that year for expenses incurred within the year. The employer must require proof that the expenses were incurred and must establish a bona fide reimbursement arrangement (some form of written document) though a formal written plan is not required. Plans can be effective beginning January 1, 2009.
In light of the efforts to promote "going green," this type of arrangement may be something of interest to your employees, particularly if they do not already take advantage of other commuter fringes. Obviously it is more likely to be of use in warmer months or warmer climates, but for your cycling employees, it might be of some value.
