7/30/2019 Commuter Program

1/4

1. Commute(Transportation) Trip Reduction (CTR)CTR is a Washington state law that requires employers with 100 or more employees to develop

programs that encourage their employees to use alternatives to driving alone for their commute.

The Washington State Legislature passed the original CTR law in 1991 in an effort to reduce

traffic congestion, reduce energy use and alleviate air pollution. The law was recently updated

with the passage of the CTR Efficiency ACT in 2006.

Who's Affected?

The CTR laws applies to all employers, including public (i.e., federal, state and local

governments, and military) and private, which have 100 or more affected employees who work

at a single worksite. Affected employees are those employees who:

Work full-time (35 or more hours/week). Are scheduled to begin work between 6 and 9 a.m. on two or more weekdays for at least

12 continuous months at a single worksite.

The CTR law also applies to local jurisdictions (cities and counties) where an affected employer

is located, as well as all state agencies - even if they have fewer than 100 affected employees.

Worksites with fewer than 100 employees can participate in the CTR program voluntarily.

Community Transit also offers a small employer program.

2. Wendell CoxOne of the most frequently recurring justifications for housing densification policies (smartgrowth, growth management, livability, etc.) lies with the assumption that automobile-basedmobility disadvantages lower-income citizens. Much of the solution, according to densification

advocates, is to discourage driving and orient both urbanization and the urban transportationsystem toward transit as well as walking and cycling.

There is no question that lower-income citizens are disadvantaged with respect to just abouteverything economic. However, there are few ways in which lower-income citizens are moredisadvantaged than in their practical access to work and to amenities by means of transit,walking, and cycling. The impression that lower-income citizens rely on transit to a significantlygreater degree than everyone else is just thatan impression.

http://news.heartland.org/wendell-coxhttp://news.heartland.org/wendell-cox

7/30/2019 Commuter Program

2/4

3. Relevant provision under the Income Tax Act -2009

Explanation to section 17(2)(iii): For the removal of doubts, it is hereby declared that the

use of any vehicle provided by a company or an employer for journey by the assessee from

his residence to his office or other place of work, or from such office or place to his

residence, shall not be regarded as a benefit or amenity granted or provided to him free of

cost or at concessional rate for the purposes of this sub-clause

The Tribunals decision

On account of the specific Explanation provided in the Act which does not consideremployer provided vehicle to employees from residence to office and back as perquisite,

the transport facility provided by the company to the employees cannot be considered as

a taxable perquisite in the hands of the employees.

Also, it is not possible to compute the value of transport facility attributable to each of theemployee since it is in the nature of composite service collectively provided to the

employees throughout the year.This collective transport benefit was not even taxed as

salary or as fringe benefit even after the introduction of the the Fringe Benefit Tax

Regime.

In view of the above, no tax is required to be deducted at source on the expenditureincurred by the company on transport facility. Accordingly, the company cannot be

treated as assessee in default and no interest should be charged under the Act.

4. Established in 1993 as part of the federal tax code section 132(f), commuter benefits weremeant to provide tax incentives to employees to encourage their use of mass

transportationin order to reduce congestion and improve air quality. The law provides for

monthly maximum caps on the amounts that can be excluded from gross income and

are therefore not taxed as ordinary income.

http://en.wikipedia.org/wiki/Public_transporthttp://en.wikipedia.org/wiki/Public_transporthttp://en.wikipedia.org/wiki/Public_transporthttp://en.wikipedia.org/wiki/Public_transporthttp://en.wikipedia.org/wiki/Public_transport

7/30/2019 Commuter Program

3/4

Eligible expenses for transit include expenses associated with using any public or privately

operated transit service. Allowable ways to provide for transit expenses is through the use of

transit passes which includes farecards, tokens, vouchers or passes which entitle a person to the

use of a transit service or to purchase a transit pass. Cash reimbursement can also be used in

certain circumstances where a voucher or similar instrument is not readily available as defined

by statute. However, cash reimbursement must be supported by a bona fide reimbursement

system which includes either receipts or a certification for the type of expense.

Under current U.S. law, commuter benefits is only available through an employer. An employee

cannot directly take advantage of these tax benefits by, for example, taking a tax deduction or

credit on that persons individual tax return. Depending on the level of employer commitment

and/or desired level of financial contribution, options for commuter benefits may include:

An employer financed tax-free fringe benefit by which a company pays directly for the cost of

an employees use of public transportation or parking (up to the designated tax -free maximum),

and the value of such benefit is not added to the employees gross income.

An employee financed commuter benefit in which an employee designates a portion of salary

before taxes (pretax income) to pay for qualified transit, vanpooling, or parking expenses (up to

theIRSallowable monthly maximum).

A combination of the previous two options in which a portion of the benefit is funded through a

tax-free fringe, with the remainder funded with pretax income of the employee, provided the

aggregate does not exceed the monthly statutory limits.

5. According to the Employee Benefits Research Institute, American companies will spend$470 million on employer-provided transit passes and nearly $3.1 billion on employee

parking expenses in 2009. When you begin to work for a new employer, it is important to

take commuter and transit benefits into account, particularly if you live in a major urban

area such as New York or Los Angeles. The cost of parking, commuter rail rides, buses

or vanpool services can add up quickly, and you dont want to end up paying a large part

of yoursalary for transit if you dont have to.

http://en.wikipedia.org/wiki/IRShttp://en.wikipedia.org/wiki/IRShttp://en.wikipedia.org/wiki/IRShttp://www.mainstreet.com/article/career/employment/out-work-get-part-time-work-and-benefitshttp://www.mainstreet.com/article/career/employment/out-work-get-part-time-work-and-benefitshttp://www.mainstreet.com/article/career/employment/out-work-get-part-time-work-and-benefitshttp://www.mainstreet.com/article/career/employment/out-work-get-part-time-work-and-benefitshttp://en.wikipedia.org/wiki/IRS

7/30/2019 Commuter Program

4/4

The federal government commuter tax program can help you save up to 40% on your

transit costs. This federal tax code gives employers the opportunity to provide subsidized

and non-subsidized tax-free transit resources to employees. These include mass transit,

vanpool and parking benefits. Through this program, employees can save money on

income tax and FICA/Medicare contributions because their reported gross income is

reduced by the amount of transit andr parking fees. Employers save money on FICA,

disability, unemployment and workmans comp payroll expenses as well.