REMEMBER THE PARKING LOT TAX? IRS ISSUES PROPOSED REGULATIONS ON POST-TCJA QUALIFIED
TRANSPORTATION EXPENSES
Citation: REG-119307-19, 6/19/20
The IRS has returned to the issue of qualified transportation fringes, including more detailed guidance on the implementation of the “parking lot tax,” in proposed regulations.50 The parking lot tax portion of the regulations build on the safe harbor calculation the IRS provided in Notice 2018-99, adding two additional simplified computations for disallowed parking costs.
The regulations cover any qualified transportation fringe which is defined as any of the
following:
- Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and place of employment (as described in sections 132(f)(1)(A) and 132(f)(5)(B));
- Any transit pass (as described in sections 132(f)(1)(B) and 132(f)(5)(A)); or
- Qualified parking (as described in sections 132(f)(1)(C) and 132(f)(5)(C))51
Under §274(a)(4), enacted as part of the Tax Cuts and Jobs Act, no income tax deduction is allowed “for the expense of any qualified transportation fringe (as defined in section 132(f)) provided to an employee of the taxpayer.”
Determining the amount of the denied expense deduction is the purpose of these proposed regulations. Proposed Reg. §1.274-13 deals primarily with qualified parking expenses, while Proposed Reg. §1.274-14 deals with other transportation and commuting expenses.