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Posted at 4:38 PM ET, 12/17/2010

IRS delays parking/train fund split

By Luke Rosiak

Two major changes that would have taken significant bites out of Metro riders' wallets and have caused confusion and anger for months both were granted one-year postponements today, at one of the last moments possible.

President Barack Obama today signed into law a bill including a provision to extend the transit benefit at its current rate of $230. It was raised temporarily from $120 as part of the stimulus package, which expires at the end of the year, but the higher rate made it equal to a long-offered parking benefit. Lowering the transit benefit without lowering the parking benefit would have encouraged people to drive. Federal employees and some private employers provide workers with the amount of the benefit, while other employers treat it as pre-tax money.

But more unexpectedly, the IRS--on the same day--also backed off a change it has warned about for nearly five years, and which Metro has still not implemented. In 2006, it announced that employers and transit systems would have to take care not to muddle funds allocated by two separate tax provisions--the aforementioned transit and parking benefits. Commuters using SmartBenefits had essentially been unknowingly drawing from the parking benefit when they swiped their card to park at station lots.

But it gave until 2008 to implement the changes, and then delayed two years out of consideration to transit systems. By 2010, Metro still wasn't prepared, and asked for and was granted an extension until January 1, 2011. Late this year, Metro announced plans to work on complying--but said it wouldn't actually make the changes until past the deadline, around spring 2011.

Now, the IRS has agreed to yet another extenstion, until Jan. 1, 2012. Metro says they'll plan ahead this time.

"The change will be phased in over several months in 2011. Metro is notifying SmartBenefitsĀ® customers and employers about this extension," said a Metro statement.

285,000 area employees currently receive transit benefits, and at least 90,000 receive more than $120 per month, according to Metro.

So with two completely unrelated and far-reaching provisions having been suspended on the same day, Metro riders will enter into 2011 in the exact same position as this year.

By Luke Rosiak  | December 17, 2010; 4:38 PM ET
Categories:  Metro, Metrobus  
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Comments

So sorry they've kept the transit benefit at $230. I was looking forward to driving when I ran out of the smart benefits.

And, yes, let's mess with federal pay raises and health benefits, while pouring more money into the failing Metro system.

This is one deficit reduction move I'd have fully supported.

Posted by: Madam81 | December 19, 2010 10:06 AM | Report abuse

Is it actually true that "Metro riders will enter into 2011 in the exact same position as this year"? Employers have already done the paperwork to reduce the benefit for January. Will they reverse that by the end of the month?

Posted by: getjiggly1 | December 20, 2010 11:49 AM | Report abuse

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