Comments Concerning Proposed Regulation on Qualified Transportation
Fringe Benefits under Internal Revenue Code Section 132(F)

IV.  Timing of Reimbursement for Parking

We also request clarification of the rules with respect to the timing of reimbursement for parking expenses. As stated above, Q/A-16(d) specifies the requirements for reimbursement arrangements, stating that employers must establish a bona fide arrangement to ascertain that employees "have, in fact, incurred expenses for transportation...." In addition, employers are required to establish reasonable procedures to ensure that amounts to be reimbursed were incurred for qualified transportation benefits. The three examples of reasonable procedures in the proposal each describe a situation in which an employee submits a request for reimbursement after the end of the month in which the employee has used either parking or a transit pass. In many areas, however, if an employee wishes to secure a parking space in a particular lot or garage on or near the employer’s premises, the employee must pay for an entire month of parking in advance of the month. In other areas, although an employee may not be compelled to pay for parking in advance to secure a space, there is a significant difference in the cost of parking if it is paid for on a daily basis, rather than monthly in advance. Generally, where an employee pays monthly in advance for parking, the employee will not be entitled to a refund if he is unable to use the parking space for the entire month.

Where an employee pays in advance for nonrefundable parking on a monthly or other periodic basis, we believe the employee has incurred the parking expense and should be eligible for reimbursement for the entire period, even if mid-way through the month the employee finds he is unable to use the parking for the balance of the period. Specifically, we believe that a reasonable reimbursement procedure should allow the employee to present a receipt for parking in advance of the period to which the payment applies and certify to his employer that the employee (1) intends to use the parking and (2) is not entitled to a refund if he does not use the parking for the entire period. Although, we think that the Proposed Regulation can be read to permit this type of reimbursement, we request that the final regulation include an example illustrating such a procedure or otherwise clarify the rules regarding timing of reimbursements to specify that such a procedure is permissible.