Executive Order 13150 - Federal Workforce Transportation - Frequently Asked Questions
(Updated January 2003)
1. Which Federal employees will receive transit and vanpool benefits?
All Federal employees in the National Capital Region (NCR) must be offered a benefit equal to their commuting costs, not to exceed $100, in the form of passes or vouchers such as Metrochek, purchased by the agency with appropriated funds. As part of a 3 year pilot program, all employees nationwide of the Departments of Transportation (DOT) and Energy (DOE) and the Environmental Protection Agency (EPA) will also be offered these same benefits, purchased with agency appropriated funds.
2. What will Federal employees receive if their agencies are located outside of the NCR?
Federal employees located outside the NCR may elect to reduce their pre-tax income by an amount equal to their transit or vanpool expenses up to a maximum of $100 per month. The agency will accumulate these withholdings and purchase the vouchers, passes, or fare media on behalf of the employee, and then distribute this fare media directly to the participating employees.
3. Who are "qualified Federal employees?"
See 5 U.S.C. 7905 and 5 U.S.C. 2105 for a complete definition of Federal employees. In some cases, your agency's appropriations acts may further define employees for purposes of this program (e.g., National Institutes of Health, P.L. 105-277).
4. What are "nonmonetary incentives?"
These incentives may include, but are not limited to, flex-time, preferential parking for employees who commute in carpools or vanpools, or preference for use of agency provided dependent care facilities. The provision of these incentives is authorized by the Federal Employees Clean Air Incentives Act of 1993, 5 U.S.C. 7905.
5. What does "amounts approximately equal to employee commuting costs" mean?
Rounded to the nearest dollar. For example, if an employee's actual commuting expense is $50.40 per month, then the agency would provide him/her transit fare media worth $50; if the cost were $50.70, then the agency would provide fare media worth $51.
6. Does "transit pass" include vanpool benefits?
7. What vanpools are eligible for these benefits?
Employer operated and employee operated van pools as well as private or public transit operated vanpools may qualify as qualified transportation fringes. For complete rules, see question #16c below.
Qualified vanpool operators in the NCR should contact the Washington Metropolitan Area Transit Authority (WMATA) (see #16f) to participate in the Metrochek program. Operators outside the NCR should contact transit agencies in their service area (see #16g) to partner with their program. If vouchers or passes for vanpool use are not readily available, then Federal employees using qualified vanpool services must obtain receipts (see #16c) for presentation to their employing agency for reimbursement. Reimbursement may be made using either employee pretax funds or agency appropriated funds. The funds used to reimburse vanpool expenses must be the same as those used to purchase transit passes and vouchers.
8. What are "more generous programs or benefits in place?"
Outside of the NCR, agencies are required to implement this program using pre-tax employee funds. If an agency decides instead to provide transit/vanpool passes or vouchers worth at least $45, using agency appropriated funds, then this would be considered a more generous program. A $45 benefit given in addition to an employee's salary is worth more to the employee than a $100 benefit using pre-tax employee funds. If an agency decides to provide an agency-funded benefit worth at least $45 outside the NCR, then it would not be required to offer any pre-tax program to its employees. If the employee's actual monthly commuting costs are less than $45, then the agency would provide a pass or voucher equal to the actual cost, rather than the $45. Inside the NCR however, agencies would have to provide the full $100 benefit as indicated above.
9. Where does the funding come from for this program?
Federal agencies must fund this program within the sums received as a result of fiscal year budgets approved by Congress. The particular type of funds to be used by the agency for this program should be determined by each agency's budget and accounting offices.
10. If my agency now offers less than $100 in agency-paid benefits, must we increase it to the maximum tax-free limit?
Yes, if your agency is located in the NCR or is DOT, DOE, or EPA. Employees must receive a transit or vanpool pass equal to their actual commuting costs, not to exceed $100 per month. Outside the NCR, if your agency is providing a benefit of at least $45 in appropriated funds, then no further action would be needed, since this would be considered a more generous program than the pre-tax program, as indicated above.
11. Will the $100 limit change over time?
Yes. Under a provision of the Transportation Equity Act for the 21st Century, beginning January 1, 2002, the monthly tax-free transit and vanpool limit rose from $65 to $100 per month. Additionally, with changes to the Consumer Price Index (CPI), the monthly limit may increase by increments of $5. The last change made under this provision was in 1996, when the monthly limit was raised from $60 to $65. Any such CPI-initiated changes will be announced by the Internal Revenue Service in the December prior to the effective year of the change. There was no change to the limit for 2003 -- it remains at $100.
12. Outside the NCR, under the pre-tax program, what are the tax consequences for the agency and the employee?
Any amount, up to the monthly tax-free limits, by which an employee elects to reduce compensation to fund either transit or vanpool benefits, is not subject to the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), and Federal income tax withholding. These amounts may also be exempt from City or State income taxes. For pre-tax program participants, since FICA would not be collected on the amount of compensation that is exchanged for the benefit, employees under the Federal Employee Retirement System will experience a minimal reduction in their Social Security benefits at retirement.
13. Inside the NCR, what are the tax consequences for the agency and the employee?Transit and vanpool benefits not exceeding the statutory monthly limit ($100 in 2003) are not wages for purposes of the FICA, the FUTA, and Federal income tax withholding.
14. Can my agency simply provide a transit or vanpool benefit in the employee's paycheck each month?
No. Regardless of the source of funds (agency appropriated dollars or employee pre-tax salary funds) or location of the agency (inside or outside the NCR), agencies must purchase transit or vanpool passes or vouchers (where readily available) and distribute them directly to the participating employees.
15. Can my agency provide parking benefits at transit facilities?
Yes. Although not required by the Executive Order, Federal agencies may elect to reimburse employees for their qualified parking expenses at or near transit stations, park-and-ride lots, or vanpool staging areas, using employee pre-tax salary funds, up to a maximum cost of $190 (2003) per month. Appropriated funds may not be used for these purposes unless exceptional circumstances exist. Parking costs are treated separately from transit costs, even if they are incurred in conjunction with an employee's use of public transit or vanpools. Agencies may also provide such parking at the agency's office for vanpools and carpools. Agencies that make cash reimbursements for parking must establish a bona fide reimbursement arrangement (see #16c) to establish that their employees have, in fact, incurred such expenses. Agency provision of single occupancy vehicle parking is not consistent with the intent of the Executive Order, but may be permitted under other authority.
16. Where can we go for additional information?
Type of Information
|a.||City and State income tax information||Transit & Vanpool Benefits Tax Exemption Information by State Jurisdiction||**********|
|b.||Contracting out the implementation and administration of the programs required by the Executive Order||
Transportation Administrative Services Center, U. S. DOT
|c.||Internal Revenue Service rules and regulations on qualified transportation fringe benefits||Internal Revenue Service - Qualified Transportation Fringes - 26 CFR 1.132-9||202-622-6040|
|d.||Federal Workforce Transportation||Executive Order 13150||202-366-1698|
|e.||Authority to allot employee salary for the agency to pay for the benefit with pretax dollars||U.S. Office of Personnel Management, Office of the General Counsel||202-606-1700|
|f.||Metrochek Program (NCR)||Metrochek||202-962-2768|
|g.||List of Transit Agencies with Transit and Vanpool Benefit Programs||Voucher & Pass Program Directory||202-366-1698|
|h.||Other information on the Executive Order||Federal Transit Administration -- Commuter Choice||202-366-1698|