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CCH® PENSION AND BENEFITS — 10/11/07

Effective date delayed for use of smartcards and debit cards to provide qualified transportation fringe benefits

The IRS has announced a one-year delay in the effective date of Revenue Ruling 2006-57, which relates to the use of smartcards, debit and credit cards to provide qualified transportation fringe benefits.

That ruling provided that the value of transit pass benefits provided by an employer to its employees through the use of a smartcard purchased from a transit company is a qualified transportation fringe benefit if the card is usable only as fare media. If the debit card may be used by employees to purchase items other than fare media, however, the card must be used in connection with a bona fide reimbursement arrangement meeting certain substantiation requirements in order to be a qualified transportation fringe benefit.

The IRS has now concluded that some transportation systems need additional time to modify their technology for compatibility with the ruling’s substantiation requirements. They are therefore postponing the effective date of the ruling from January 1, 2008 to January 1, 2009 (IRS Notice 2007-76).

For more information on this and related topics, consult the CCH Pension Plan Guide.

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