The House and Senate have released a conference report on tax reform. This represents the last version of the bill and it is expected to be passed into law next week. The final version preserves the transit benefit; however, the bike benefit is eliminated and employers who subsidize can not write off that expenditure for their corporate taxes. Employers will still receive payroll tax benefits and the write off provision applies to both transit and parking, (but not bicycle – which CAN be written off). For more information, please click here. ACT will send out a press-release on Monday.
Late Friday evening, the Senate passed its version of tax reform. There were no additional changes made to sections that refer to the transportation fringe benefit. To recap, the Senate bill preserves parking and transit benefits in section 132(f) of the tax code. However, the final Senate bill eliminates the Bike benefit until 2026 and also includes language that would eliminate the deductibility of transportation expenses. The Senate language goes a bit further than the House language by also including transportation expenses not tied to section 132(f), for example, if an employer paid for an employee to take a cab home, it would not allow that expense to be deducted.
The House and Senate will now convene a Conference Committee with the Senate. There are significant differences between the House and Senate versions and there is still a danger that Conferees will axe section 132(f) in order to pay for another provision to be included. ACT remains active in conversations to ensure that the transit benefit is protected.
ACT and It’s Members Must Remain Vigilant
House – Yesterday in the House, the Ways & Means Committee approved a final package of amendments from Chairman Brady (R-TX) and then moved to pass the bill out of Committee. The legislation will now head to the House floor. Pursuant to House rules, no amendments may be offered by rank & file Members during floor debate. It is expected that the Chairman will offer at least one, but possibly two, amendments next week which will finalize the package. Democrats will be provided an opportunity to offer an amendment in the nature of a substitute. As of now, nothing has changed regarding the status of the transit benefit and section 132(f) remains untouched in the House bill. We will monitor the situation and alert ACT members as needed.
Senate – Late last night, Senator Hatch (R-UT) released what is known as a ‘plain-English’ Chairman’s mark. In short, it is what it sounds like, it is a legislative proposal written in plain English that will get turned into legislative text. In the mark, parking and transit benefits are preserved. However, the Chairman’s mark eliminates the Bike benefit. The Senate also includes language that would eliminate the deductibility of transportation expenses. The Senate language seemingly goes a bit further than the House language by also including those expenses not tied to section 132(f), for example, if an employer paid for an employee to take a cab home, it would not allow that expense to be deducted.
ACT has sent a note urging the Finance Committee to reconsider its position on the bike benefit and instead of eliminating the benefit, it should reform the benefit so that it can be offered pre-tax, used along with transit, and make bike-share an eligible expense. The Senate Finance Committee will begin its action next Monday.
ACT and It’s Members Must Remain Vigilant
(Editors Note: This post will be continually updated over the course of the next several weeks. This post is current as of Wednesday morning, November 8, at 11:00am)
The House Ways & Means Committee released an initial version of tax reform that keeps section 132(f), the section of law related to the transportation benefit, virtually unchanged. The only change made in the legislation is related to employers who subsidize their employee’s’ transportation expenses. The proposal would no longer permit employers to ‘write-off’ expenses made for employee parking or transit. However, the employer will continue to enjoy payroll tax benefits from providing the transportation fringe benefit (both as a subsidy or pre-tax).
The House Ways & Means Committee has begun the arduous process of marking-up the legislation and to this point, section 132(f) remains untouched. Chairman Kevin Brady (R-TX) has offered a pair of manager’s amendments, neither of which impacted the transit benefit. Over the next several days we expect a series of amendments to be offered, primarily by Democrats. We expect at least one more manager’s amendment in Committee and perhaps one additional change before it goes to the House floor. Once it goes to the House floor, no additional amendments will be allowed.
The Senate is expected to release a draft version of it’s legislation on Friday and begin action next week.
David Straus, Executive Director of the Association for Commuter Transportation, had the following to say:
‘This is an important victory for our association and its members, but more importantly, this is a victory for the American commuter. While the process is not over, we will continue to work with Members of Congress to preserve this important benefit. I want to congratulate Chairman Brady and his staff on this work and I want to send thanks to the many Congressional champions who have worked tirelessly on behalf of commuters in their district’s.’
Introduction of this legislation marks just the first of what will be many steps to preserve this important benefit and ACT will work tirelessly to preserve this momentum as the tax reform process moves forward.