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Why it soon may pay to bike commute(11 posts)

Why it soon may pay to bike commutemoneyman
Jun 4, 2003 6:58 AM
From http://www.plansponsor.com/pi_type10/?RECORD_ID=20908. (I don't think it's accessible unless you're in the pension business, but that's the source.)

Senators Introduce Bicycle Commuter Tax Bill

June 3, 2003 (PLANSPONSOR.com) – Recently introduced legislation would give bicycle commuters not only exercise, but also a tax break.
The Bicycle Commuter Act, S1093, introduced by Senators Olympia Snowe (R-Maine) and Ron Wyden (D-Oregon), would allow people who travel to work by bicycle to receive the same commuting tax credits as those who travel by vehicle or public transit. The current benefits are realized under the Transportation Equity Act for the 21st Century (TEA-21), which allows employers to offer employees up to $100 a month for public transportation options and up to $190 per month for qualified parking plans, according to Washington-based legal publisher BNA.

Additionally, in the House of Representatives, a companion has been introduced by Representatives Earl Blumenauer (D-Oregon) and Mark Foley (R-Florida). That bill, HR 1052, introduced in March, has 25 co-sponsors.

Spoke Sponsors

The eligible commuter purchases are tax free if the employer makes them on behalf of the employee and would allow employees who choose a bicycle commute to collect a cash reimbursement that sponsors said would help defray costs related to maintaining the condition of their bicycles. However, employees who opt for a cash reimbursement will realize a taxable event.

"People who bike to work help reduce pollution in the air and congestion and wear and tear on our roads," Wyden said. The legislation "will help to promote this environmentally friendly, alternative form of transportation."

"By including bicycle commuting as an eligible mode of alternative transportation under the transportation fringe benefit, the Bicycle Commuter Act will ensure that bicycle commuters will have access to the benefits already available to individuals who commute by mass transit and van pool," Snowe said. "This straightforward but significant addition not only provides fairness to commuters traveling by bike, but would also help achieve the broader goals of the transportation fringe benefit provision by encouraging healthy, environmental, community-oriented commuting."

The legislation was referred to the Senate Finance Committee, which will write the tax portions of the legislation that will succeed TEA-21. The Transportation Department's (DOT) reauthorization proposal is silent on the transportation fringe benefit, an official said, because the department does not propose to change the existing law. The provisions included in TEA-21 in Section 9010 increased the amount of the benefit, but the DOT official said because the department is not altering the program, the calendar year 2003 benefit amounts will continue into the next authorization period.

Companies would not be required to participate in the program, and if they do, they do not have to offer the highest amount allowed under the law.


Sounds good to me!

$$
Can someone translate this please...biknben
Jun 4, 2003 7:21 AM
I'm all for a bike commuter tax break. I'm already benefiting from bike commuting. A little extra money wouldn't hurt either.

I having some difficutly understanding the legislation. These two statements are puzzling to me, "The current benefits...allows employers to offer employees up to $100 a month for public transportation options and up to $190 per month for qualified parking plans..."
and
"The eligible commuter purchases are tax free if the employer makes them on behalf of the employee and would allow employees who choose a bicycle commute to collect a cash reimbursement that sponsors said would help defray costs related to maintaining the condition of their bicycles. However, employees who opt for a cash reimbursement will realize a taxable event."

What if my employer doesn't offer a public transportation or qualified parking plan reimbursement? It all seems a little twisted and certainly not money in my pocket just yet. I'll wait and see.
I THINK this is what it meansvindicator
Jun 4, 2003 7:50 AM
What I THINK this means is that it will only do you any good if you are an employee of an employer who has in its fringe benefits package for employees reimbursement for things like taking public transportation. Essentially, the govt. wants to encourage public transportation, so they allow employers to reimburse bus fare or train fare to employees on a tax-advantaged basis. That way, the employee gets to ride the bus or train for free (or reduced cost), there's one less car on the road, and the employer can defer some of the cost of reimbursing the employee through a tax break.

This sounds like it's extending to the deal to bike commuters, such that your employer, if they have such a plan, can pay you cash to ride your bike. It sounds like the cash is taxable to you, but it would be deductible to your employer.

But (assuming it passes) this is all optional. You may not be an employee - you may own your own business or be a partner, etc. You may be an employee, but your employer may not have such a plan. Your employer may have such a plan, but may opt not to add bikes when/if this becomes law...

No expertise claimed - consult your professional advisor, yadda, yadda.
Can someone translate this please...94Nole
Jun 4, 2003 8:04 AM
What the law allows for now is that employers (who so choose - it doesn't say that they "must" offer) to provide to their employees a transportation allowance that is not taxable to the employee but is tax deductible by the employer (up to $100/month/employee for those who ride public transportation or up to $190/month/employee for parking costs). This proposed legislation would seem to allow employers to include "in-kind" bicycle maintenance costs to it's employees (to some $ limit). Meaning that they would select a LBS (or several) to do the maintenance for bike commuters and so long as the employer paid the bike shop directly, there would be no tax consequence for the employee. Seems also to say too that the employee could elect to receive the cash of the benefit but would have to include cash received as taxable income. This because there would be no way to know if the employee used the cash for the purposes for which it was intended.
Seems like politicians are on a roll.........abicirider
Jun 4, 2003 7:39 AM
The following is an article published in my May edition of Bicycle Retailer and Industry news I receive each month:

Congress Revisits Bicycle Commuter Act
Washington, D.C. - Congressmen Earl Blumenauer(D-Ore) and Mark Foley (R-Fla.) reintroduced the Bike Commuter Act in March. If passed, the legislation would give employees who bike to work the same tax breaks available to other commuters who carpool or take mass transit. "It's time to level the playing field for bicycle commuters," Blumenauer said.
"Bicycling is one of the cleanest, healthiest and most environmentally friendly modes of transportation that exsists today. People who bike to work should have the same financial incentives as those who use transit or participate in a qualified parking plan." The current Transportation Fringe Benefit provides a $180 tax exempetion to commuters in qualified parking plans or $100 for transit and vanpool expenses. Employees also may opt to take cash compensation. "Across the country people are working to create more livable communities that include reduced traffic congestion, improved air quality and increased neighborhood saftey, " Blumenauer said. "The Federal government should do its part to support these goals by providing transportation benefits to people who choose to commute in a healthy, environmental and neighborhood-friendly fashion"
The above was taken for May Edition Page 54 Bicycle Retailer and industry news.

I hope one of the politicians stickes with it and it passes, next my question would be in general is the public to lazy, in such a hurry to get from point A to point B that they would never think of riding a bike let alone commuting to work on a bike.
The positive side could be a big boost to LBS I would think the comfort bike category would really take off but thats just my opinion.

Be Safe Out On The Roads!!!!!!!!
ray Still
Mooresville, NC
Great Idea, But How Do You Police This?Gregory Taylor
Jun 4, 2003 7:46 AM
Hey, I'm all for giving bike commuters a little boost. My employer already offers subsidies for the local mass transit system (the Metro subway). My question is, how do you establish who is actually riding their bike to work, and how many times a week do you have to ride in to qualify? And how do you keep track of those that are claiming to ride in, but don't? And how do you get the benefit to the riders -- issue checks? Add it to your salary?

Oh, the bike rack at work will be JAMMED with bikes that never, ever move if this is adopted...
Because one would have to incur the expense...94Nole
Jun 4, 2003 8:16 AM
before receiving the benefit. Currently, one submits a receipt for parking (or employer pays it directly) or for public transportation. No receipt, no benefit. Believe me, in compliance with the paperwork reduction act, there will likely be several hundred trees killed to hammer out the overly technical details.
Enforcement not really requiredScot_Gore
Jun 4, 2003 7:13 PM
Transportation fringe benefits have been available for years. They're offered for things like taking the bus/train, car pooling, or subsidizied parking. While some employers police these offerings, others don't.

If your company buys or gives you money for a bus pass, how do they know you actually took the bus. If they provide a free parking space, how do they know you're parking a car in it, if they give you an income credit for car pooling, how do they know you didn't drive in alone. They don't, it's a matter of trust, integrity, and degree of concern these things actually merit. In comparison to things like, if I pay you a wage, how do I know you're actually working vs posting on cycle forums, you know, REAL concerns of your employer should have. :-)

my 2 cents

Scot
the scoop is....shamelessgearwhore
Jun 4, 2003 9:05 AM
Some employers already offer transportation incentives for biking to work. We fill out a tally at the end of the month and get proportional reimbursement according to the percent commuting by bike (or bus, train, carpool, etc.) Reimbursement for bus, etc is added to paycheck tax exempt, while reembursement for biking is considerred TAXABLE income. This legislation would make it easier for companies to set this up and would allow the same tax exempt status as other modes. Enforcement falls in the hands of the employer. The govt doesn't care. If it were discovered in an audit that many employees were making up tally sheets, the employer would get slapped with a fine. If the employer suspects that people are lying they would stop the incentive rather than risk it.

Overall its really quite simple and makes great sense! It certainly makes more sense than the tax break you get if you buy a Hummer for business use!
re: Why it soon may pay to bike commutetigermilk
Jun 4, 2003 9:06 AM
I work for the federal government, and even if this bill passes I doubt seriously I'd ever be compensated to commute by bike.
This is all a bunch of bulls#t...eschelon
Jun 4, 2003 9:31 AM
First of all what it says is that in order for you to get this benefit, your employer has to want to participate. And if they do want to participate, there is no spending/saving advantage in doing this because although they will get some tax advantages for doing this, they in the end will still have to spend money on you...money they don't really need to spend on you...money they could use for other things like marketing, operating expenses, etc. This little scam is nothing more than a token gesture that your employer (should they be the very generous type) would give you because they like you...not because they are going to make money off of this...because in fact they are not...they are going to lose money on this...as most non-standard fringe benefits do.

There's no way in hell my employer would ever consider spending money on me to upgrade my bike equipment, pay for my parking, and give me $100 a month to ride my bike to work...here's the biggest fact: my employer doesn't spend any money on me to drive myself to work everyday...and they are not spending/losing money on me...if they paid me to ride my bike to work everyday, they would lose money.

It's as simple as that...and if your employer does do this for you...you are one lucky mutha!