DataPath 132

In 1997, the IRS Code § 132(f)(4) was amended to provide that constructive receipt rules would not apply to employees who are given a choice between taxable compensation and certain excludable parking benefits. The Transportation Equity Act for the 21st Century (May 22, 1998) expanded the amendment to include mass transit and vanpooling arrangements.

On January 27, 2000, the IRS published proposed Treasury Regulations describing how qualified transportation fringe benefits should work. Then, on January 11, 2001, the IRS finalized the 2000 proposed regulations.

Both the proposed and final regulations are generally effective for taxable years beginning after December 31, 2001, except the readily available 1% rule for transit passes applicable for taxable years beginning after December 31, 2003. Neither set of regulations states that taxpayers can rely on these regulations before that date.

This manual and the plan documents reflect the rules for taxable years beginning after December 31, 2001, and incorporates the above mentioned change as becoming operative after December 31, 2003.

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