NBAA Requests Hearing on Disallowance of Commuting Expenses for Aviation Industry in TCJA

The National Business Aviation Association (NBAA) submitted comments to the Internal Revenue Service (IRS) on Aug. 24, 2020, on behalf of the business aviation community with respect to Prop. Treas. Reg. § 1.274-14, which was issued in the federal register with a Preamble on June 23, 2020, "Qualified Transportation Fringe, Transportation and Commuting Expenses under Section 274," 85 Fed. Reg. 37,599 (Jun. 23, 2020). The comments were written by Holland & Knight Partner John Hoover, who serves as chair of the NBAA Tax Committee.

In its comments to the IRS, the NBAA requested that a public hearing be scheduled on the proposed regulations as they relate to the disallowance of commuting expenses, which was enacted in the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97).

The NBAA is requesting guidance on the following subjects:

• Compensation Fringe Benefits Reported as Taxable Compensation to the Employee
• Deductible Business Travel Distinguished from Commuting
• Only Marginal Costs of Providing Commuting Benefits Should Be Disallowed
• Exception for Travel to Ensure the Safety of the Employee
• Section 274(l) Applies Only to Employees

Regarding the first of the above issues, Prop. Treas. Reg. § 1.274-14 does not address the question of whether the disallowance of commuting expenses under § 274(l) applies to the cost of commuting benefits when the employer properly reports the value of such commuting benefits as a taxable fringe benefit to the employee (such as by including it in the employee's Form W-2). Since disallowing the employer’s deduction of the cost of commuting benefits when the employee is taxed on the value of those benefits would effectively result in double taxation, the comments request guidance that the employer’s deduction of such commuting benefits be allowed.

For more information, contact Mr. Hoover.

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