New York City Transportation Plan Requirement for Mass Transit Expenses

April 1, 2015

2016 UPDATE: The NYC Department of Consumer Affairs (DCA) posted Rules and an FAQ to help employers comply with the NYC Transit Ordinance. The Rules include definitions of key terms, timing of offers to new employees, recordkeeping requirements, a financial hardship exemption for employers, and the civil penalties for non-compliance.

If your organization has 20 or more full-time employees working in NYC, you are required to offer qualified mass transit transportation benefits to NYC employees as of January 1, 2016 under the new NYC Transit Ordinance. There is a six-month grace period (to July 1, 2016) for NYC employers to comply.

A qualified transportation plan allows employees to make pre-tax elections for mass transit expenses incurred when commuting to and from their workplace. Under IRS rules, employers must load employee elections directly onto transit passes or “vouchers”, when readily available, and distribute the passes to participating employees. At this time, NYC’s Metropolitan Transit Authority does not provide employers with the ability to load elections onto an MTA-sponsored card or voucher for mass transit expenses. The IRS has indicated that terminal-restricted debit cards, which are readily available from third-party vendors in NYC, are considered transit passes or “vouchers”. NYC employers that do not currently offer a transportation plan may need to contract with a transportation vendor that provides terminal-restricted debit cards.

Please that note while qualified parking and bicycle expense benefits are also available in a qualified transportation plan, NYC employers are not required to offer these transportation benefits.

If you have at least 20 employees working in NYC and do not currently offer a transportation benefits plan, please contact your Keller account team for assistance.