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

I.  Executive Summary

The Committee commends the Treasury and Service on the issuance of the Notice of Proposed Rulemaking on Qualified Transportation Fringe Benefits published in the Federal Register on January 27, 2000, as proposed Treasury Regulation § 1.132-9 (the "Proposed Regulation"). The Proposed Regulation is helpful in clarifying a variety of issues pertaining to the administration of a transportation benefit program. We are especially pleased with Q/A-15 in which the Proposed Regulation addresses the treatment of unused compensation reduction amounts. We believe this provision will help to encourage greater use of qualified transportation programs and, consequently, help in reducing the overall congestion in metropolitan areas.

There are, however, certain provisions of the Proposed Regulation that would, in our opinion, benefit from clarifying or other changes. In the paragraphs that follow, we provide specific comments that address these concerns with the Proposed Regulation. We believe further changes need to be considered if the goal is to encourage employers to establish qualified transportation fringe benefit programs that include mass transit benefits. In particular, we believe that the incorporation of the following comments into the final regulation will further encourage employers to establish and continue these benefits. As a result, Code section 132(f) will have the effect of reducing metropolitan traffic, realizing Congress’s intent.