Rina Fujii, Associate in the Employee Benefits and Executive Compensation practice, in the firm’s New York office, was quoted in SHRM, in “Getting to Work in a Pandemic: The Next Challenge,” by Allen Smith.
Following is an excerpt:
Employees who rely on mass transit are worried about contracting coronavirus on their commutes. To limit workers’ exposure to lots of other commuters, employers could offer parking subsidies or shuttle buses or rent a suburban office. Each option has its costs, but some might be tax deductible. …
Disaster Relief Payment
Employer payments for mass transit alternatives might qualify as a disaster relief payment under Section 139 of the Internal Revenue Code, said Rina Fujii, an attorney with Epstein Becker Green in New York City.
Code Section 139 lets employers reimburse or pay employees for qualified disaster relief payments, which are defined as “reasonable and necessary personal, family, living or funeral expenses incurred as a result of a qualified disaster.” Such payments are tax-free to employees and tax-deductible for employers, Fujii explained. They also are uncapped and do not require substantiation.
“It appears that the IRS considers the pandemic to be a qualified disaster for purposes of Code Section 139,” she said. …
“However, the IRS has yet to provide guidance regarding what sort of payments constitute qualified disaster-relief payments,” Fujii added. “Employers who wish to provide mass transit alternative payments should keep checking for new IRS guidance.”
Fujii also recommended that employers draft a written plan outlining eligible participants and expenses and the manner and timing of payments. …
Another innovative way to improve the commute is to rent a temporary, additional office closer to where employees live.
“The employer must be able to afford renting the temporary office, which would be an added expense if it will be paying rent on its permanent office at the same time, although it is tax-deductible under Code Section 162 as a business expense,” Fujii said.
The rented office must provide a working environment that complies with occupational safety and health requirements. And, she noted, it should be in a location that is convenient for employees and any business needs, such as near a shipping depot or major client.
“The employer should also keep in mind that the pandemic and the economy remain in flux—any rented office should offer terms that allow for flexible cancellations or extensions to the lease in case the employer’s circumstances change unexpectedly or there is another wave of the pandemic,” she said.
Fujii added that leasing offices in the suburbs may not work if employers have specific infrastructure needs and employees do not have a way to get to work other than mass transit. …
Fujii noted, “If the employer does not staff the annex office, then there is not much difference between working in the annex office and working from home, which would be much less expensive.”