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Tax Law Guarantees Continued Mass Transit Benefits for Full-time NYC Employees

April 6, 2015
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Effective January 1, 2016, a new tax bill (NYC Intro. No. 295-A), requires New York City companies with 20 or more full-time employees to offer pre-tax transit benefits. The bill encourages employers to take advantage of an existing federal tax benefit, which allows businesses to offer its workers $130 a month as pre-tax income for transportation. The new law provides that, in the event that the employer's number of full-time employees is reduced to less than 20, any employee eligible for the pre-tax transit benefits prior to the employee reduction will continue to be provided with the benefit for the duration of the employee's employment with the employer. For New Yorkers who depend on mass transit to get to and from work, this continuing tax benefit is a huge safety net for long-term full-time employees of NYC businesses.

“Full-time employees” means employees who work an average of 30 hours or more per week. This law will not apply to the U.S. government, the State of New York and its agencies, including the legislature and the judiciary, the City of New York, or to local governments. The law also may not apply if certain collective bargaining agreements are in place; or if the employer has demonstrated that the offering of this benefit would cause a financial hardship. The law will be enforced by the Department of Consumer Affairs.

Companies that do not comply with this law will be subject to a civil penalty, but employers will have 90 days to fix a violation before it is imposed.  Employers will not be subject to penalties for violations that take place before July 1, 2016.

For more information, please contact:

Stacy Gilbert, CPA
Partner or (973) 218-0500