Posted by Jonathan Maus (Publisher/Editor) on January 27th, 2009 at 12:42 pm
I’ve gotten many emails over the past few weeks wondering why I haven’t covered the Bike Commute Tax Benefit that became law on January 1.
One reason is that I’m just not all that enthused about it; and it turns out I’m not the only one.
After 7 years of effort by advocates and bike-friendly politicians, the bike commuter benefit was ushered through as a way to curry favor and votes for passage of the controversial, $700 billion financial bailout package. To make matters worse, the benefit is only good for $20 per month (a pittance compared to the benefit for driving a car), you can’t get it if you also receive the transit benefit, and to add insult to injury, no one seems to be able to figure out exactly how to implement it.
And it’s not just me. Professional bike advocates all over the country are having a hard time explaining to their members how to use it. A page about it just published on the website of the San Francisco Bike Coalition says it’s “a headache” to implement (they also published a helpful summary of it, which I’ve pasted below).
Wondering if there was a chance to amend and/or change the law, I contacted someone at Congressman Earl Blumenauer’s Portland office. To my surprise, it turns out they’re already on the case.
“Right now, it’s one or the other, and that’s a shame.”
— Meeky Blizzard, an advisor to Rep. Earl Blumenauer
According to Blumenauer’s Advisor for Livable Communities, Meeky Blizzard, policy aides in their D.C. office are working on a bill that would allow an employee to receive benefits for both bikes and transit. “Right now,” she said, “it’s one or the other, and that’s a shame.” Blizzard also confirmed that they are working to improve the “provisions for how to administer the benefits” (meaning, make it easier to figure out how to get your money) and are looking into the possibly of increasing the dollar amount.
At this point, details as to how and where these changes might fit in remain to be seen, but Blizzard says “we’re working on it.”
If you’re wondering how to implement the Bike Commuter Tax Benefit, I’ve pasted text below that I took from the website of the San Francisco Bicycle Coalition (emphasis mine). Also check out the FAQs at BikeLeague.org.
The Commuter Benefit is real and in effect — it is the same as all other pre-tax benefits for transit and parking currently available by the IRS. (See Section 2, “Transportation (Commuting) Benefits” of the “IRS Publication 15-B (2009), Employer’s Tax Guide to Fringe Benefits” – online here)
Employers can simply write off the $240 in Box #14 of the W-2 form at the end of 2009 (along with all other transit and other pre-tax benefit calculations).
Of course, this isn’t the way many HR departments like to operate– they prefer to contract the processing out to Accor Services (a private company who provide the ‘Commuter Checks’ many folks are familiar with) or a competitor. Accor has contracts with each of the Transit Agencies to accept and reimburse them for commuter checks once used, and then provides employers with each employee’s deduction amounts at the end of the year to include in the W-2 Box #14.
And that’s really where the sticking point lies– Transit Agencies are, obviously, run a bit a differently than any small scale bike shop (contracts, accounting departments, etc.) — let alone finding and contracting with each and every shop in the nation isn’t an easy feat for Accor services. So, unfortunately, many HR departments may choose not to implement this process until the private contractors like Accor offer their services for the bike benefit.
Everything that can and will be done at the Federal level is done. It’s law and it’s good to go– it’s just a headache to do. The SFBC has been working closely with the American League of Bicyclists and local shops to try to implement this locally as best as possible and will continue to do so.
We, also, hope to see this implemented and effective soon and if your employer chooses to implement it independently, please let us know how it works. Once we have more solid details, we’ll be sure to let all of our members and interested employers know!
Has your employer signed you up for this yet? Are you a business owner who has looked into this? If so, please share your experiences in the comments below.
UPDATE: 1/28, 11:05: See comments below, like this one for more information about how this new tax law applies in Oregon.