The House on December 3 approved the Tax Increase Prevention Act of 2014 (HR 5771). The bill extends individual, business and energy tax incentives through 2014 and makes technical corrections to existing tax laws. It contains a couple of payroll-related provisions.
Transit benefit parity
Some fringe benefits provided by employers for commuting and transportation are tax-free to employees. In 2013, benefits for transit passes and commuter highway vehicles were the same as those for parking. However, the parity provision wasn’t extended in 2013 so that, for 2014, the monthly limitation for vanpools (commuter highway vehicles) and transit passes was $130 while the fringe benefit exclusion amount for qualified parking was $250. The provision would make them equal again retroactively effective for 2014.
The situation occurred once before when the American Taxpayer Relief Act of 2012 (P.L. 112-240) was signed into law (see http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Retroactive-Increase-in-Excludible-Transit-Benefits).
Due to the retroactive effect of a similar provision, the IRS issued guidance (IRS Notice 2013-8, IRB 2013, IRB 2013-7, February 4, 2013). If the provision in the current bill becomes law, the IRS will probably remind employers of the previously-issued guidance.
Work Opportunity Tax Credit
The bill would extend the WOTC for targeted group members before January 1, 2015.
For more information on this and other topics, consult the Visit our News Library.