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Abstract
The IRS has updated guidance on the requirements for employers using smartcards, debit cards, and cash reimbursement arrangements to provide qualified transportation fringe benefits to employees. Beginning after Dec 31, 2015 employers are no longer permitted to provide qualified transportation fringe benefits in the form of cash reimbursement in geographic areas where a terminal-restricted debit card is readily available. Code Sec. 132(a)(5) excludes from income a qualified transportation fringe benefit, including vanpools, transit passes, and parking. The Tax Code excludes employee benefits from FICA, FUTA and income tax withholding if the benefits will be excluded from income under Code Sec. 132. Under Code Sec. 132(f)(3), a qualified transportation fringe includes a bona fide cash reimbursement arrangement, but only if a voucher or similar item exchangeable for a transit pass is not readily available.