Tax Notes Today has quoted partner John Schembari in the article “Some Employers Can’t Abandon Newly Taxable Commuting Benefits.” Under the Tax Cuts and Jobs Act (P.L. 115-97), tax-exempt employers will have to pay tax on commuting benefits provided to their employees. Though some cities have laws requiring employers to offer these benefits, tax-exempt employers won’t be able to avoid those taxes without changes in local laws.

Schembari said, “While many tax-exempt employers are considering whether they will continue offering benefits like parking subsidies or transit reimbursements to their employees, some employers don’t have that luxury. The San Francisco Bay Area, New York City, and Washington, D.C. require certain employers to offer qualified transportation benefits to their employees. This means that many tax-exempt employers will have [unrelated business taxable income] as a result of complying with these local laws.”

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