Consider a Commuting Allowance.

The phrase "commuter choice" may suggest a decision about which freeway to take to work or what pastry to select at the drive-through coffee shop, but Commuter Choice is actually a recently enacted federal tax benefit for both the employer and employee.

Commuter Choice is a package of employee transportation benefits voluntarily offered by employers that encourages employees to use alternative modes of commuter transportation to that of driving alone. (Depending on where your staff lives, car-or vanpooling, public transit, bicycling, walking, or inline skating may all be transportation alternatives.)

Implementing the program can be attractive for small-staff associations that often do not have the resources to offer extensive employee benefits, but do have flexibility in providing assistance to each employee for his or her particular commute choice. The program can also attract labor in a tight market, reduce the social costs of traffic congestion and air pollution, increase employee morale and retention rates, and help untangle associations from a web of increasing costs associated with providing employee parking.

Commuter Choice, Qualified Transportation Fringe Benefits, is an amendment to the Internal Revenue Service Code and resembles cafeteria-style benefit plans. However, it does not require a written plan, discrimination rules, penalties, reports, or IRS approval. Employers may provide benefits at any level up to the limits, and to any employee in any location.

1. Employers may purchase transit passes or vanpool subscriptions for employees. The employer pays no payroll taxes on this amount and deducts up to $65 per month as a business expense.

2. Employees may set aside up to $65 of their salary per month for the purchase of a transit pass or vanpool subscription. The employer saves 7.65 percent in payroll taxes and employees save payroll and income taxes on the amount set aside.

3. Employer and employee share in the cost of the transit pass or vanpool subscription. In this case the employer saves payroll taxes on its share and deducts the amount as business expense. The employee saves payroll and income taxes on his or her share.

4. Employers may offer employees the monthly value of a parking space in cash. Employees can choose to accept the cash and pay taxes on it or to apply the cash to a transit pass or vanpool subscription.

For more information on Commuter Choice and its implementation, go to the Association for Commuter Transportation's Web site at www.actweb.org and click on "Commute Benefits." The guidance document relating to qualified transportation fringe benefits in Section 132(f) is available at www.irs.ustreas.gov.

As with any addition to employee benefits and changes in tax obligations, consult human resource and tax professionals while developing Commuter Choice programs.

Deborah Maus, executive director, South Natomas Transportation Management Association, Sacramento, California (staff size: 1; annual operating budget: $120,000).