PRE-TAX TRANSPORTATION
NEW JERSEY ENACTS S.1567
PRE-TAX
TRANSPORTATION
FRINGE BENEFITS
BY: HARRY P. WILLS III
O
n March 1, 2019 Governor
Philip Murphy signed into
law S.1567, which requires
employers to provide certain
pre-tax transportation fringe
benefits. More details will be provided by
the Commissioner of Labor and Workforce
Development, but the ordinance is effective
immediately. It is not anticipated that
enforcement will begin until March 1,
2020, or the effective date of the rules
and regulations to be adopted by the
Commissioner of Labor and Workforce
Development, whichever comes first.
From the ordinance “Pre-tax
Transportation Fringe Benefit” means a
pre-tax election that provides commuter
highway vehicle and transit benefits,
consistent with the provisions and the
limitations of section 132(f) of the United
States Internal Revenue Code of 1986. For
2019, a monthly amount of up to $265
can be excluded from income and be used
for qualified transportation costs. This
amount is annually adjusted for inflation. A
qualified transportation fringe includes any
of the following provided by the employer:
1. Commuter transportation in a commuter
highway vehicle including van pools
(employer operated, employee operated or
publicly operated van pool)
2. Transit passes, which are any pass, token,
fare card, voucher, or similar item entitling
a person to ride free of charge or at a
reduced rate on one of the following:
a. On mass transit
b. In a vehicle that seats at least six
adults if a person is in the business of
transporting persons for pay or hire
operates the vehicle
3. Qualified parking is parking at or near your
business premises. It does not include parking at
or near your employee’s home.
If an employer provides an employee with a
qualified transportation fringe that exceeds
the maximum excludable amount, the excess
is includible in the employee’s income. If
the employee pays for part of the qualified
transportation fringe, the less there is of the
excess value to be included in income. You
cannot exclude a qualified transportation
benefit you provide to an employee under the de
minimis or working condition benefit rules.
Employers subject to this new ordinance
are those that are covered by New Jersey’s
Unemployment Compensation Law and employ
at least 20 persons.
Violators of this requirement shall be liable for a
civil penalty of not less than $100 and not more
than $250 for a first violation. An employer will
have 90 days to offer a pre-tax transportation
fringe benefit plan before the civil penalty
is imposed. After 90 days, for each 30-day
period, an employer may be fined $250 for each
subsequent violation for failing to offer the pre-
tax transportation fringe benefit plan. +
Harry P. Wills III joined the Firm in 1986 and was admitted
as a partner in 1997. He is licensed to practice as a Certified
Public Accountant in New Jersey and Pennsylvania and is also
a Chartered Global Management Accountant. Harry earned
his Bachelor of Science degree in Business Administration from
Saint Joseph’s University.
Mr. Wills’ area of focus is in taxation and the audits of employee
benefit plans. His clients include law firms, insurance agencies,
construction and manufacturing corporations, wholesalers and
distributors, hotels and investment entities.
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