Employee Benefits-IRS Delays Effective Date On Rules Pertaining To Use Of Credit/Debit Cards To Provide Qualified Transportation Fringes

In Notice 2009-95 (the “Notice”), the IRS further delayed the effective date of Revenue Ruling 2006-57 (the “Revenue Ruling”) until January 1, 2011.

The Revenue Ruling provides guidance to employers on the use of smartcards, debit or credit cards, and other electronic media to provide qualified transportation fringes to employees under sections 132(a)(5) and (f) of the Internal Revenue Code. Since certain transit systems needed time to modify their technology and make it compatible with the Revenue Ruling’s requirements, the IRS had postponed the effective date of the Revenue Ruling several times, most recently until January 1, 2010. The IRS feels that additional time to make those modifications is needed.

Despite the delay in the effective date, the Notice allows employers and employees to rely on the Revenue Ruling with respect to transactions occurring prior to January 1, 2011.