Question: Can employees get reimbursed through the commuter benefits plan for using Uber and Lyft to commute to work?
Compliance Team Response:
The issue here is whether UberPool and Lyft Line qualify for commuter benefits. A standard Uber or Lyft ride would not qualify for commuter benefits because that is not considered “vanpooling.”
The only requirement for vanpooling (where the van is not provided by the employer or employee) is that the vehicle have a seating capacity of six or more adults, not including the driver.
In 2014 and 2015, the IRS put out a few Information Letters on this issue confirming that a separate rule relating to the van’s use (referred to as the “80/50 rule” requiring that the vehicle be at least half filled 80% of the time) applies only to employer-operated or employee-operated van pools. Private or public transit-operated vanpools such as UberPool or Lyft Line are not subject to the 80/50 requirement.
So again, the only requirement is that the van must seat at least at least six adults, not including the driver.
UberPool and Lyft Line have app features permitting use of commuter benefits for qualifying vanpools in select locations with select vendors:
IRS Information Letter 2015-0041:
If a vanpool is an employer-operated or employee-operated vanpool, the van must comply with the 80/50 rule for the value of the benefit, or the employer’s reimbursements of the employee’s costs, to qualify as transportation fringes excludable from income and employment taxes.
If a vanpool is a private or public transit-operated vanpool, the van must seat at least 6 adults, not including the driver. The 80/50 rule does not apply to private or public transit-operated vanpools.
Treas. Reg. §1.132-9, Q/A-3:
Q-. 3. . What are transit passes?
A-3. A transit pass is any pass, token, farecard, voucher, or similar item (including an item exchangeable for fare media) that entitles a person to transportation—
(a) On mass transit facilities (whether or not publicly owned); or
(b) Provided by any person in the business of transporting persons for compensation or hire in a highway vehicle with a seating capacity of at least 6 adults (excluding the driver).
Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).