Technology hurdles are forcing the Internal Revenue Service to again delay the effective date of a revenue ruling that gave employers guidance on the use of smart cards, debit cards and credit cards to provide transportation fringe benefits to employees.
The effective date of Revenue Ruling 2006-57, which was issued Nov. 20, 2006, was originally set for Jan. 1, 2008. In 2007, however, the Treasury Department and the IRS learned that some transit systems needed extra time to modify their technology and make it compatible with the requirements for vouchers described in the revenue ruling.
One provision in the revenue ruling had stated, "A voucher or similar item is readily available for direct distribution by an employer to employees if and only if the employer can obtain it from a voucher provider that does not impose fare media charges greater than 1 percent of the average annual value of the voucher for a transit system, and does not impose other restrictions causing the voucher not to be considered readily available."
Last October, the IRS delayed the effective date until Jan. 1, 2009. Now, with transit systems still experiencing technology hurdles, the effective date has been postponed for another year, according to Notice 2008-74: "Certain transit systems continue to experience technology barriers to achieving compatibility with the requirements for vouchers. Therefore, the ruling's effective date is further delayed until Jan. 1, 2010. Nevertheless, employers and employees may rely on Revenue Ruling 2006-57 with respect to transactions occurring prior to Jan. 1, 2010." An IRS spokesman declined to elaborate on the exact technology barriers that the transit systems were encountering.
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