TRANSIT BENEFIT CONFORMISTS AND DISSIDENTS

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Payroll professionals may see additional implications from the tax extenders bill (Pub. L. 114-113) as states decide whether to change Internal Revenue Code conformity dates to include the new provisions related to transportation benefits.

In December, President Barack Obama signed the tax extenders bill into law, which not only changed the due date for Forms W-2, Wage and Tax Statement, to Jan. 31 from Feb. 28 starting in 2017, but also established permanent parity for the exclusion from income for employer-provided mass-transit passes, van-pool benefits and parking benefits. The benefit parity was retroactive for 2015.

The implications may extend beyond federal payroll requirements, as states consider whether to adjust Internal Revenue Code conformity dates to include the changes made by the law.

Conformists

So far Idaho and Virginia legislatures have passed bills changing each state’s I.R.C. conformity date to include the tax extenders bills.

A bill changing Virginia’s conformity date to Dec. 31, 2015, from Dec. 31, 2014, was signed Feb. 5 by Gov. Terry McAuliffe (D). In Idaho, a bill changing the state’s I.R.C. conformity to Jan. 1, 2016, from Jan. 1, 2015, was signed by Gov. Butch Otter (R). Both laws took effect with the governors’ signatures.

Dissidents

Massachusetts and New Jersey typically do not conform to federal transit benefits and released 2016 state commuter benefits that differ from the federal levels.

In Massachusetts, the 2016 monthly exclusion amount for employer-provided parking increased to $255 from $250, the same as the federal level. However, the transit passes and commuter highway vehicle transportation amount remained $130, the same as the 2015 federal level before retroactive parity became law.

New Jersey provides annual, rather than monthly, commuter transportation benefits. The annual benefit for 2016 is $3,060.

On the Fence

In Maine, the legislature has not yet approved a bill to make Maine’s conformity to the IRC permanent.  The bill was introduced to the state legislature in January by the Department of Administrative and Financial Services under direction from Gov. Paul R. LePage (R).

Maine tax forms were changed to be consistent with the proposed conformity date, even though the law requires approval from the legislature to take effect.

House Democrats who tied approval of the bill to a proposed increase in education funding were accused of causing the delay in a statement released Feb. 12 by the governor’s office.

Form W-2 Deadline

Even in states that conform to the changes made to the I.R.C. code, separate legislation would be required to match the Jan. 31 Form W-2 deadline. In 2015, Alabama, Connecticut, Indiana, Mississippi, North Carolina and Utah moved annual reconciliation due dates to Jan. 31. More states may likely follow suit to match the 2017 federal deadline. Legislation that would change the annual reconciliation date to Jan. 31 from Feb. 28 was proposed Jan. 28 to the Maryland senate by Comptroller Peter Franchot (D).

Twenty-eight states have annual reconciliation dates that do not conform to the 2017 federal deadline for Forms W-2 reporting data for tax year 2016.

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