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This exclusion applies to benefits you provide to your employees for their personal transportation, such as commuting to and from work. These rules apply to the following transportation benefits:
- De minimis transportation benefits.
- Qualified transportation benefits.
Special rules that apply to demonstrator cars and qualified non-personal use vehicles are discussed under Working Condition Benefits for Transportation and Commuting
De Minimis Transportation Benefits:You can exclude the value of any de minimis transportation benefit you provide to an employee from the employee's wages. A de minimis transportation benefit is any transportation benefit you provide to an employee if it has so little value (taking into account how frequently you provide transportation to your employees) that accounting for it would be unreasonable or administratively impracticable. For example, it applies to occasional transportation fare you give an employee because the employee is working overtime if the benefit is reasonable and is not based on hours worked.
For this exclusion, treat any recipient of a de minimis transportation benefit as an employee.
Qualified Transportation Benefits - This exclusion applies to the following benefits:
- A ride in a commuter highway vehicle between the employee's home and work place.
- A transit pass.
- Qualified parking.
The exclusion applies whether you provide only one or a combination of these benefits to your employees.
Qualified transportation benefits can be provided directly by you or through a bona fide reimbursement arrangement. However, cash reimbursements for transit passes qualify only if a voucher or a similar item that the employee can exchange only for a transit pass is not readily available for direct distribution by you to your employee. A voucher is readily available for direct distribution only if an employee can obtain it from a voucher provider that does not impose fare media charges or other restrictions that effectively prevent the employer from obtaining vouchers. See Regulations section 1.132-9 for more information.
You can exclude qualified transportation fringe benefits from an employee's wages even if you provide them in place of pay. For information about providing qualified transportation fringe benefits under a compensation reduction agreement, see Regulations section 1.132-9(b)(Q-11).
Commuter highway vehicle - A commuter highway vehicle is any highway vehicle that seats at least 6 adults (not including the driver). In addition, you must reasonably expect that at least 80% of the vehicle mileage will be for transporting employees between their homes and work place with employees occupying at least one-half the vehicle's seats (not including the driver's).
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