Posting by Thomas Parisi

The IRS has issued Notice 2013-8, which provides employers guidance on how to deal with the retroactive (part of the American Taxpayer Relief Act of 2012 passed 1/1/13) increase in the maximum monthly exclusion afforded employees from $125 to $240 for 2012. The increased exclusion is applicable to employer-provided transit passes and commuter highway vehicle (vanpooling) transportation benefits and puts them on par with the exclusion for qualified parking for tax year 2012 and 2013.  Such benefits are excluded under Section 132(f)(2)(A) of the Internal Revenue Code.

Within Notice 2013-8, the IRS has spelled out a special administrative procedure that is applicable to employers who have not filed their fourth quarter Form 941 and would like to avoid filing amended 941’s for all quarters in 2012. In order to qualify for this procedure, the employer must repay or reimburse their employees that qualify for such benefits the over-collected FICA tax on the “excess transit benefits” for the entire 2012.

For those employers that have already filed their fourth quarter Form 941, they are precluded from this special procedure and must file an amended 941-X for each quarter that the repayment or reimbursement is applicable.

In addition, the IRS has included in the notice how such changes affect the 2012 Form W-2’s and provides guidance if such forms are or are not already distributed to their employees. As the deadline January 31st 2013 filing due date for both the Form 941 and employees issued W-2’s is rapidly approaching, it’s imperative that those employers affected by this late tax law change take the necessary actions to properly reflect and file their year-end wage returns and statements.

Under previously released Revenue Procedure 2013-15, the maximum monthly exclusion for the employer-provided qualified parking, transit passes, or commuter highway vehicle transportation benefits for 2013 is $245.

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