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Rice Leads Long Island Delegation Letter Urging the IRS to Provide Relief for Commuters

Many Long Island commuters have amassed unused transportation benefits during the COVID-19 outbreak that they can no longer access or utilize as intended

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Washington, September 28, 2020 | comments

GARDEN CITY, NY – U.S. Representatives Kathleen Rice (NY-04), Peter King (NY-02), Gregory Meeks (NY-05), Lee Zeldin (NY-01), and Tom Suozzi (NY-03) today sent a bipartisan letter to the Internal Revenue Service (IRS) urging the agency to consider available options within its regulatory authority to provide targeted relief for individuals who have accumulated unused transportation benefits due to the COVID-19 pandemic. The letter also encourages the IRS to issue new guidance related to unused transportation benefits to address any ongoing confusion among employees, employers, and third-party providers. 

Many Long Island commuters are enrolled in transportation benefits programs where a certain amount per month of their pre-taxed wages are deducted from their paychecks to pay for commuting costs. With several industries instituting work from home policies during the pandemic, many of these individuals can no longer access or utilize these funds as intended. 

“Working families on Long Island are in need of assistance during this pandemic, and they could greatly benefit from access to their unused commuter funds,” said Rep. Kathleen Rice. “The IRS should allow commuters who have already allocated money into transportation benefits programs to utilize this money for their current needs.” 

“It’s imperative that the IRS provide Long Islanders with access to their unused funds,” said Rep. Peter King. “The pandemic has been devastating for all and there is certainly no need for the IRS to punish those not at fault. We need to emerge stronger not weaker.”

“Transportation benefits that are sitting unused by commuters during this pandemic should be put to use in the form of financial assistance,” said Rep. Gregory W. Meeks. “Working families are in need of relief, and the IRS can provide some of that much needed relief by letting commuters enrolled in their program utilize their transportation funds.”

"For hardworking Long Islanders, every penny counts, especially as we emerge from the outbreak of coronavirus," said Rep. Lee Zeldin. "Long Island commuters utilized programs to responsibly put aside money they thought they would use for public transportation costs. Then, they found themselves working from home instead. They deserve guidance on accessing these unused funds and their hard-earned money."  

"Too many Long Islanders who are now working from home have had pre-taxed wages deducted from their paychecks to pay for unused transportation benefits programs offered by their employer," said Rep. Tom Suozzi. "With many workers and families in need of critical financial assistance, the IRS must find a way to tap these unused commuter funds for targeted relief and other essential purposes. People can’t wait – they need all the help they can get.”

The full text of the letter can be found here and below:

The Honorable Charles P. Rettig

Commissioner

Internal Revenue Service

1111 Constitution Avenue, N.W.

Washington, DC 20220

Dear Commissioner Rettig,

We are writing to urge the Internal Revenue Service (IRS) to issue guidance on qualified transportation fringe benefits with respect to unused commuting funds and to consider additional relief for certain employees impacted by the ongoing COVID-19 crisis.

In our districts on Long Island and the surrounding New York City metropolitan area, many employees take advantage of pre-tax transportation benefits programs through their employers to save money annually on their commuting costs. As New York quickly became one of the hardest hit states by COVID-19 earlier this year, many people were forced to work from home for indefinite periods of time. Workers across industries faced uncertainty about their employment, with many employees not knowing if or when they would be able to return to work. Many individuals and businesses continue to face disruptions during this challenging time.

Employees enrolled in transportation benefits programs generally elect to have a certain amount per month of their pre-taxed wages deducted from their paychecks to pay for commuting costs. Current IRS regulations generally allow employees to change or revoke elections related to qualified transportation fringe benefits before the beginning of a pay period. While this allows flexibility in the amount employees may contribute towards their transit expenses on a month to month basis, the COVID-19 national emergency has resulted in a number of cases where individuals have accumulated unused funds that they can no longer access or utilize as intended.

In some cases, commuters did not suspend their benefit elections in time to avoid the monthly deduction from their paychecks. Other individuals who already had accumulated unused funds in commuter accounts were no longer able to use these benefits as planned due to workplace disruptions caused by the pandemic. Although these funds can generally be used for future commuting costs, many people still do not expect to resume their normal commute for the foreseeable future. This situation has also created confusion around commuter benefits programs that are administered by a third-party provider, such as WageWorks. While IRS regulations permit unused benefits to be carried over across periods, these plans vary across employers and third-party providers.

Current regulations also require that an employee must forfeit any unused commuter benefits upon termination from employment. This is concerning for employees who may face termination due to COVID-19. As you know, businesses nationwide are experiencing financial hardship and facing challenges with employee retention as a result. If an employee is terminated due to COVID-19, he or she will lose any unused funds that have accumulated in a commuter account. These individuals may be forced to forfeit a significant amount of unused commuter benefits that they were unable to access as a result of this ongoing crisis and at no fault of their own.

Many workers and families are in critical need of financial assistance during these challenging economic times and could greatly benefit from direct access to these unused commuter funds for other essential purposes. Therefore, we urge you to consider any available options within the IRS’s regulatory authority to provide targeted relief for individuals who have accumulated unused transportation benefits due to the ongoing pandemic. Additionally, we strongly encourage the IRS to issue further guidance related to unused transportation fringe benefits to address any ongoing confusion among employees, employers, and third-party providers.

Thank you for your consideration.

Sincerely,

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