Pretax Transportation and Parking

[Skylane]

Client worked in NYC and had pretax withdrawals for Parking and public transportation from her wages. The moneys were held by an intermediary company and disbursed as she paid parking and transportation.

she recently retired; no longer commutes and is seeking to get the (approx) $1400 back expecting it to come as taxable income.

She is being told (by the intermediary) that the unused money 1, is not reimbursable to the employee; 2, it can only be applied to the employer as a credit to the employers fees for the intermediaries services, and 3, it is NOT ‘legal’ for the employer to reimburse or pay these monies to the employee.

Does anyone know if this is part of IRC and the unused funds are forfeit?

[qbteachmt]

I found:

"However, in Information Letter 2020-0024 the IRS cautions that the qualified transportation plan regulations do not authorize cash refunds of qualified transportation fringe benefits that are provided through a compensation reduction agreement.

IRS Information Letter is available at: https://www.irs.gov/pub/irs-wd/20-0024.pdf

"

In response to a letter asking about that scenario because, due to covid-19, an employee is no longer using that benefit that is prefunded by salary reduction.

https://www.wagnerlawgroup.com/resources/health-welfare/irs-confirms-options-for-unused-qualified-tr...

Also: https://www.irs.gov/pub/irs-wd/20-0031.pdf

Also, search this for "QTF" or "salary reduction": https://www.irs.gov/pub/irs-pdf/p5137.pdf

I wasn't aware of it; it acts like an FSA for commuting.

[Skylane · Accepted solution]

Thanks! Looks like it may be use or lose (or spend a lot of her time joy riding the subways)

[qbteachmt]

You stated she doesn't work for them, now. Joy riding the subway will be out of pocket.