Included as part of the Tax Increase Prevention Act of 2014 signed by the President on December 19, 2014 were changes to mass transit benefits. The monthly maximum for mass transit benefits provided to an employee has been $130 per month, while the parking fringe benefit has been $250. The newly enacted Tax Increase Prevention Act of 2014 has equalized the two benefits retroactively to January 1, 2014 by increasing the mass transit benefit to $250.00. Transit commuters who run all their commuting costs through their employer’s transit plan should get a retroactive true up—a potential $576 extra tax savings for 2014.
Employers may have to correct the taxable fringe benefits for employees who used post-tax dollars to pay for any mass transit benefits that were provided above the $130 monthly maximum. As this change is retroactive to January 1, 2014, payroll amendments may be in order. Guidance from the Internal Revenue Service (IRS) will soon follow, describing the mechanism by which the adjustments may be made.
Additionally, the Tax Increase Prevention Act of 2014 gives the IRS six months to develop a program for certifying Professional Employer Organizations (PEOs). Under the Act, the PEOs can accept sole liability for their client employer’s payroll taxes if they agree to the certification program. Additionally, under the Act, certified PEOs can now take predecessor or successor status when applicable, as well as enable their client to avail themselves of the employer credits that are available such as the Work Opportunity Tax Credit (WOTC) or Research and Development (R&D) credits.
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