New Card Requirement for Transit Benefits

Parking benefits not affected

The purpose of this communication is to inform you of recent guidance (Revenue Ruling 2014-32)* that will impact current Transit Benefit Plans.

Effective January 1, 2016, the Internal Revenue Service (IRS) will no longer allow manual cash reimbursements for pre-tax transit benefits. Instead, those employers who offer transit benefits will be required to provide a debit card to their employees.

This means that Clients who participate in a FlexSystem Transit Benefit Plan are strongly discouraged from submitting manual claims for reimbursements after December 31, 2015. However, they will be able to use the TASC Card to purchase transit passes from a qualified merchant.

TASC Card purchases for transportation expenses will be automatically approved when made at designated vendors for eligible transit expenses. This will ensure that the pre-tax funds placed in an employee’s account will only be used for eligible expenses, further enhancing the compliance of the Plan.

Please take a moment to review the important information below detailing TASC’s response to this new regulation.

Current Plan Status

Action

FlexSystem Plan without the TASC Card

TASC will issue TASC Cards for participating employees.

FlexSystem Plan with the TASC Card  (not activated for Transit)

TASC has revised the Plan Settings to activate the Transit Plan on the TASC Card for all current cardholders.

FlexSystem Plan with the TASC Card (activated for Transit)

No action required; the Plan is already in compliance with the new regulation.

Your cooperation is greatly appreciated!

*This new guidance provides that cash reimbursements may be offered by an employer for transit benefits only if a voucher – or a similar item that may be exchanged for a transit pass – is not readily available. In the past, the IRS permitted cash reimbursement arrangements where a debit card product was available to pay for the transit fare. However, after December 31, 2015, employers are no longer permitted to provide qualified Transportation Benefits in the form of cash where vouchers or terminal-restricted debit cards are readily available.

 

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