Federal Bicycle Commuter Tax Credit
Tagged: tax credit commuting
What do you all make of this? Sounds too good to be true?
i think my sentiments are exactly as the article states. it’s bittersweet. it’s a shame that it was a pork on this major bill, and not it’s own, but who knows if it would have passed on it’s own
Here’s a really good FAQ on it from the League of American Bicyclists
The day after it was passed, I sent an email to my HR rep at work and asked if they would be participating in the program. In the month since I have received no response. (No surprise.) I’ll be sending them another email this week and in another month, if I have no response I’ll jump over my rep’s head and go to corporate. I’ll ask every month until I get an answer, keeping a record of each email and receipts for all my bike purchases.
I’m fortunate enough to work for a CEO/founder who is a bike commuter. I sent him an email about it, and he immediately forwarded it to our CFO to investigate the implementation details.
I have the human resources people at my work lookign itnot it as well, they seemed very receptive. Hopefully it will all work out!
i hope my employer is bike friendly enough to do this
sorta like unionizing the union organizers
My HR folks have been “looking at it” since early December…probably time to poke at ’em again.
Daddy needs a new pair of Lake boots!
The answer I got from my employer was “NO, no one seems to have any interest in it.” My response was, “Of course, no one has an interest in it. No one knows about it except me and I had to tell you about it.” Their response was still no. No surprise. They have a hiring and salary freeze in effect, just dropped our 401k matching (again) and have otherwise exhibited all the signs of barely avoiding going under. They are not going to expend any sort of resources on something as trivial as an employee incentive.
They are not going to expend any sort of resources on something as trivial as an employee incentive.
They have a hiring and salary freeze in effect, just dropped our 401k matching (again) and have otherwise exhibited all the signs of barely avoiding going under.
Gee, I wonder if the tenuous state of the company has anything to do with treating employee incentives as “trivial”. Nah, couldn’t be…it’s the employees’ responsibility to drum up enthusiasm for their work, not that of management…
If I’m not mistaken there is no out of pocket cost to employers. Each month $20 that was paid to the federal government is now redirected to commuters. Right?
here’s the FAQ again
there is a company out there that helps employers handle this. they are called commuter check
“We offer the Commuter Check for Bicycling voucher which makes participation a breeze. Your employer will first need to choose to offer the benefit (pre-tax deduction or an employer subsidy). Once you sign up with your employer to get the benefit, take the voucher you receive to any dedicated bicycle shop or bicycle parking or storage location to redeem your value. If your purchase is greater than the amount of the voucher you have, you can use multiple vouchers or add value with another credit/debit card.”
There is an contact form for the Human Resources person at your workplace:
You can also have them call 1-800-531-2828
Accor Services USA (ASUSA) has added some additional guidelines for the program.
1. The voucher will be available for customers nationwide beginning in March, exclusively through http://www.commutercheck.com.
2. The maximum value will be $20; vouchers will be valid for 13 months.
3. These vouchers will be able to be used for the purchase of bicycles,
bicycle accessories, maintenance, and storage. Bicycle accessories
include pumps, locks, racks, lights, and safety gear but does not
include clothing and food products such as energy bars.
4. The bike shop or service provider must be registered with ASUSA to accept the vouchers. The League of American Bicyclists and the National Bicycle Dealers Association are working on outreach to the shops.
My employer called me back and said the organization had no plans to go through with this as it was up to them to pay out the monthly amount and they were not “environmentally green” enough to follow through with it.
Anyone else have any success with their employer?
the employer can pay $20 and get some sort of reimbursement from the feds or it can come out of the employee’s paycheck “pre-tax”
I asked the Pitt benefits people. They were very responsive and asked for some receipts (I mentioned I had a bike locker rented through Pitt parking services), but at the same time, they made no promises. Last I heard, my request and receipts got shuffled to a different person who would contact me if/when she found a way to implement this tax reimbursement or whatever.
I haven’t heard anything further. Some friends of mine out in California have had equal luck trying to get this benefit out there. Apparently the tax break only helps employers who pay tax. If you work for a nonprofit or other tax-exempt institution (such as a university), your employer can’t claim the benefit. At least this is what I’m told. I still don’t see how this stops them from taking $20 out of my check pretax and sticking it on some bike debit card like they do for medical expenses. Anyone have the exact details for the law?
Nice to be thrown a bone you can’t even use
Does anyone know how the medical savings/other benefits (at Pitt, this includes bus passes, IIRC) work from a tax perspective?
Gee whiz… That $20 writeoff will sure help compensate for the $36,000 + that every single american owes the federal government to pay off the Bush / Obama bailouts.
How about we quit arguing about the color of the ball and chains strapped to our ankles and talk about something that would really make a difference and abolish the income tax altogether?
When the government gets to tell you how much of your paycheck you get to keep before you ever get it in your hands, I hate to break it to you, but you are not free anymore.
here’s a decent article and critique of the benefits:
I don’t think businesses are to blame on this one. From what I can tell this provision is entirely smoke and mirrors, benefiting no one tangibly. I own a very small business, and have two employees that bike to work. I wanted to look into this for them, so I read as much information about the program as I could find. It’s certainly possible that I’m not understanding something correctly. Nonetheless, the more I read the text of this provision the angrier I became.
All that came out of my research was the following (edited) tirade I sent to my business partner (who also bikes to work). Heck, I now live a state away from my business but when I was in the area I biked to work everyday because that’s all I could afford to do if I wanted to keep my business going. Below my reaction to reading the provision are excerpts from the provision that provoked my frustration.
1) What the hell is the government doing? Why should they be giving anyone “fringe benefits” for transportation, cyclist or otherwise? Shouldn’t that be the job of the employer? Maybe if they’d let us keep more of our money in the first place… Ultimately it’s how much we’re taxed, not some gimmicky credit program that needs to be revisited. If we each earn $18,000 (our best year to date) we pay a combined total of more than $7,000 in taxes to the government. About two-thirds of that is for social security. But, we get to save $480 for two biking employees, just as long as WE aren’t the biking employees! I don’t use this phrase often, but WTF???? What happens to the remaining $6,500 we’ve given up? If we were just taxed at the same rate as an employee making $18,000 we could each keep an additional $650 in our pockets and give our two biking employees the very same program the government is now “giving us the opportunity” to offer. God as my witness, I hope there is something I’m not understanding about this system and when we find someone to properly explain things it will make more sense.
2) I do not understand how this system benefits us, even when accepting that things are the way they are. What’s to stop us from simply paying for a repair when an employee’s bike has a problem? Why do we need a special congressional act to do that? As far as I know, as long as the bike is used for business purposes we’ve always been able to do that. Why shouldn’t a commute count? Furthermore, if we had our own company showers, like some large companies do, we’d already be footing the shower bill and deducting the expense. So, if after a sweaty commute my employee wants to shower somewhere else and can provide me with a receipt of the expense what’s ever stopped me from paying for it myself? Of course, where can a normal employee go to shower and obtain a receipt? Yet that is specifically what this provision suggests.
I initially thought that by doing this we’d be able to pay our employees less and replace that lost income with a tax-free credit. If we could do that, we’d save a bit of money on payroll tax. However, when you look at the quotes I have pulled out from my reading, you will see why I don’t think it actually works that way. It appears that the only way we can “save” money is by spending more money than we already are while not being taxed on that additional expense (as opposed to being taxed more by increasing our payroll $20 a month). In other words, technically we’ll have to spend more money to make this happen. Therefore, we don’t save any money at all. Then again, no matter what the paperwork says, if an employee volunteers to take a $20 per month paycut and begins to receive a $20 monthly biking credit who’s really going to stop us? For that to happen it appears he’ll need a way to document $20 worth of expenses each month, though. Then again…
3) This whole thing seems to be a work in progress even though it became effective in January. I keep reading that people are “working with the IRS” to determine how to make this provision function for employers. Ergo, I’m not sure I’ll have a clear answer on how to proceed any time soon.
4) On a positive note, it appears that one can take bike expenses averaged over a 15 month period to come up with deductions totaling up to $20 a month, for a year. Unfortunately, I have no idea how one goes about doing this, especially since another part of the provision expressly states that no more than $20 can be reimbursed in a given month and that receipts must be supplied for all expenses in a given month. Do not ask me why there appear to be 15 months in a “calendar year.” Do let me know if you can explain this to me further.
“Generally, you can exclude qualified transportation fringe benefits from an employee’s wages even if you provide them in place of pay. However, qualified bicycle commuting reimbursements do not qualify for this exclusion. For information about providing qualified transportation fringe benefits under a compensation reduction agreement, see Regulations section 1.132-9(b)(Q-11).”
“For any calendar year, the exclusion for qualified bicycle commuting reimbursement includes any employer reimbursement during the 15-month period beginning with the first day of the calendar year for reasonable expenses incurred by the employee during the calendar year.”
“A self-employed individual is not an employee for qualified transportation benefits.”
“Additionally, if employers choose to do so, they can provide the benefit through a cash reimbursement method. Under this scenario the employer would reimburse the employees for cash outlay for costs associated with their monthly bike commute. The reimbursement would be for up to the $20 maximum monthly amount and the $20 would come from the cooperating employer.
The key point to consider in setting up a cash reimbursement program is that there is a mechanism for the employee to certify that they will commute to work by bike a substantial portion of the month (that could 60% of the time as an example). Additionally, that there is a bona fide reimbursement arrangement whereby the employee provides receipts for covered expenses incurred such as, bike maintenance, commuting gear, parking facilities, changing or shower facilities etc…”
“The original intent was that an employer could now provide up to $20 a month in incentives related to an employee’s bike commuting, to include, but not limited to, bike parking facilities, shower facilities, and maintenance then deduct that amount from their taxable income. Again, we will work with IRS to establish more guidance for interested employers.”
“The Bicycle Commuter Act has been in front of Congress for seven years; it’s a simple, equitable provision that puts cyclists on the same footing as people who get tax breaks for taking transit or driving (or parking, actually) their cars to and from work. The total anticipated cost of the provision, estimated by the Joint Committee on Taxation, is a very modest $1 million per year, as compared to the $4.4 billion annual cost of parking and transit benefits.”
The IRS tax code is almost 70,000 pages, depending on who you ask and the source.
The IRS does not even know their own law anymore, not a single tax attorney or our elected representatives know it.
We have a treasury secretary and high ranking officials who seem to not be required to pay the income tax, while if you or I don’t pay you will literally lose your shirt.
I have read stories about the IRS going after homeless people, 90 year old ladies taking the food out of their fridge (who knows if that is 100% true, but I believe it), and ruining your life.
They can take money out of your bank account without a court hearing, and seize your assets after only sending you a letter in the mail saying you owe them.
I work for myself and the IRS is absolutely the biggest nightmare about working for myself.
When your government decides how much of your paycheck you get to keep before you even have it in your hands, then you do not have freedom.
When you own your own company and have to keep receipts handy and report every single expenditure you make over the year on top of all your income to the government, and then pay at least 30% of the money you make, you don’t have freedom.
The serfs in feudal europe rebelled and literally hung their masters when they were taxed less of a percentage of their wealth as we are this day.
The history of the United States and creation of it in the first place was a direct result of the historical struggle between the Central Bank powers (The Federal Reserve being the 3rd central bank of the US), and the free people. Over-taxation started the revolution in the first place.
When I hear people debating about piddly things like getting a $25 bike credit, or getting to pull out money from your paycheck “tax-free” to put in an HSA (Health Savings Account) to pay medical expenses (but then you lose the money if it is not spent. What good is that in the end if you don’t get sick enough to spend all of it?
It is awesome that we have people lobbying the government to give us a break from the taxes we are forced to pay and speak out for the cyclists and those who make more room on the streets by biking to work.
However, this system is completely out of control and in my humble opinion the focus should be a united front against our government and outright revolt (peacefull of course) of civil disobedience against this income tax and remove it.
Regardless of who you are, or the business you run, or how accurately you keep your books the law is so complex and ridiculous that no matter WHO you are, you are breaking the tax laws. Corrupt societies tend to make up so many laws nobody could possibly understand all of them so that every person in the population is breaking a law at any given time and can be “punished” for it by the powers that be.
There are other ways the government can tax people without you having to make a complete accounting of every penny you make and all that you spend to them.
Removing the income tax (completely) and using a consumption-based tax would help the cycling community quite a bit, since many people in this scene are not heavy consumers and tend to buy what they need. How nice of a bike could you get every year if you had back 1/3 or more of your income!
Just think about the good work organizations like BikePGH! could do without the burden and wasted time and resources needed to follow this outrageous tax code, which has even more hoops to jump through for non-profit organizations.
The improvements to infrastructure, etc that we all want do not come from the income tax anyway.
All the income tax does, is pay the interest on the debt that the privately-held Federal Reserve Bank charges us for the money they make up out of thin air.
For a detailed understanding of how this system works, the works of G. Edward Griffin is highly recommended, among other authors.
Bringing this zombie thread back from the dead. I saw some news that there are three reps in the house who want to bring a bill to the floor that would restore the bicycle commuter tax deduction (or credit or employee reimbursement or whatever it is.) I’m planning to call Conor Lamb’s office to make sure they are aware of it, and to suggest that they change the language to make a it a tax credit rather than whatever it was previously.
It sounds like the tax break is still employer-administered, which was the problem with the last one. It is very hard to persuade employers to start offering this when there are few bike commuters. I know of only a couple people who got it.
Ideally the replacement would offer the tax break to the individual. Though, honestly, I’m not sure this type of micro-social engineering is really worth the trouble. I’d rather see government simply build bicycle infrastructure.
I agree with pretty much everything you’ve written, except that I think this kind of nudge is a really good complement to funding for new infrastructure, and it would cost a pittance.
I called Conor Lamb’s office this afternoon. The aid I talked to had not heard of the bill, but was interested in learning more about it. I suggested that it would reach more people if it was structured as a credit instead of as a subsidized benefit.
I think it’s possible if more people called and expressed interest, that he would sign on as a cosponsor.
Been commuting daily for about 8 years. I have not received any tax break for biking since my employer doesn’t file the paperwork. I hope someone can actually benefit from this.
my guess is that whatever benefits company a business is using requires extra $$$ for every added service. So if you have a company administering your parking benefit, you pay X amount, but if (back when it was available) you wanted to add on the bike benefit, you had to pay Y. It was probably not worth anyone’s time to add that benefit given it was probably only for 1 person per company and the matching receipts for reimbursement is an expensive process.
When this program originally came out I was working at a business with 200+ employees in the Pittsburgh office, and ten or eleven other offices up and down the east coast. I looked into it and what I recall was this:
1) I was the only one in the office, and probably the entire company, who biked consistently enough to qualify for the program, which essentially functioned like a health care savings account.
2) It would have been an administrative burden, on both the HR department and, to a lesser extent, my secretary, to participate in the program.
3) You were allowed to use the equivalent program to shield parking costs from taxes, or get the bicycle commuter benefit, but not both. I was depositing a set amount into the parking program, pre-tax, and withdrawing it monthly based on how much I spend on parking. It didn’t shield all that much from taxes, but it was enough to be worth the time I put into the paper-shuffling.
4) Despite commuting frequently (as often as not, or more, depending on weather and free time), there was no reality where the bike commuter benefit would save me what the parking tax benefit was saving me.
5) The bottom line: even if the program would have been offered, I would have been constrained to act in my own best interests and continue using the parking tax benefit.
I frankly think these programs – whether for biking are parking – are bad policy, are political gimmicks, and should be done away with in favor of simply building bike infrastructure that a person of average fitness and tolerance of risk would actually use.
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