Is Your Commute to Work Fueled by Pork?

Eric Schillinger, Staff Writer, ESchillinger@albanylaw.edu

In his inaugural address this past Tuesday, President Obama challenged Americans to confront the many crises facing the nation.1 One such crisis is America’s continued reliance on foreign oil for energy.  President Obama noted the need for the country to move away from this reliance, stating that “each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.”2 President Obama’s vision for an energy efficient and independent America will hopefully inspire Americans to take responsibility for how they approach energy consumption by working to minimize fuel use in favor of “green” transportation.

Ironically, when former President George W. Bush signed the Emergency Economic Stabilization Act3 of 2008 (EESA) into law last fall he helped lay the ground work for a potential, federally funded bicycle commuting program that may help decrease America’s reliance on foreign oil, discourage urban flight and suburban sprawl, and increase the health and well being of Americans.

The EESA contains three separate divisions, each a discrete Act unto itself.4 Section 211 of Division B, a little publicized line item provision within the 451-page EESA, has little logical connection to the economic bailout necessitated by the sub-prime mortgage crisis.56 Division B of the Act began as a separate bill, but the House eventually tacked it onto the proposed bailout bill as the Energy Improvement and Extension Act of 2008 (EIEA).7 With just one small provision titled “Transportation fringe benefit to bicycle commuters,” Section 211 of the EIEA amends the Tax Code to exempt bicycle commuting costs paid to employees by employers.8 In part, Section 211 states:

    The term ‘qualified bicycle commuting reimbursement’ means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.9

Simply put, the bicycle provision of the Act provides a tax incentive for bicycle commuters.  Employers may now offer, as a tax-free fringe benefit, reimbursement of costs associated with cycling to work.  The provision requires the rider to show that he or she “regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment. . . . “10 If the rider fulfills these requirements, then he or she is eligible to exclude employer reimbursement for bicycle commuting costs up to $20 per month (for a maximum of $240 per year) from gross income. Continue reading “Is Your Commute to Work Fueled by Pork?”