Enhanced Public Transit Benefit in Peril as 2010 Draws to Close

An enhanced transit benefit included in the 2009 stimulus law will terminate at the end of this year unless Congress renews it.  Part of the American Recovery and Reinvestment Act included an increase in the tax-free transit benefit from $120 to $230 a month, making it equal to the parking benefit that has been part of federal law for many years.

The benefit was intended to make public transportation a more appealing option for commuters as opposed to sitting in traffic. Transit systems like the Washington, D.C. Metro worry that if the benefit is curtailed, more congested roads will follow.

D.C. transit officials are lobbying Congress to extend the subsidy, and the Washington Post reported last week that Metro would launch an advertising campaign after Thanksgiving “to inform riders of the changes and their impact,” including ads in local newspapers and banners in stations where there is a high concentration of commuters who receive the tax benefit or subsidy.

Transit officials also worry about the impact of an Internal Revenue Service ruling from last year that will require transit and parking benefits to be separated on so-called Smart Benefit accounts cards. Under the plan, the customer’s card would “pull” payments from either the transit purse or parking purse automaticallly as riders used faregates, bus fareboxes or card readers at parking lots. At the end of each month, any unused benefits in the new electronic purses would be credited back to the employers.

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