Download maryland commuter tax credit

Panel 2: Return on Investment: Benefits of Effective
Employment Transportation to All Community Partners
TAX INCENTIVES FOR EMPLOYERS OFFERING
COMMUTER BENEFITS
MARYLAND COMMUTER TAX CREDIT PROGRAM
Maryland Commuter Tax Credit – The most generous tax credit of its type
in the nation.
Partners Involved: Maryland Department of Transportation, Maryland Transit
Administration, Maryland Department of the Environment, Maryland
Comptroller’s Office, plus, 65 – 100 employers who register for the
Maryland Commuter Tax Credit each year.
Funding Sources: State funds and CMAQ funds
Contact Info:
Buddy Alves, Maryland Transit Administration, Office of
Communications and Marketing, 410-767-8750,
[email protected]. See also www.mtamaryland.com and
www.commuterchoicemaryland.com.
Project Name:
Program description: The Maryland Commuter Tax Credit program allows businesses
operating in Maryland including 501 (c) (3) or (4) employers to claim a 50% tax credit for the
cost of providing alternative commute options and commuter benefits to their employees up to a
maximum credit of $50.00 per participating employee per month. The credit may be claimed
against the financial institution franchise tax, the state income tax or the insurance premium tax.
History of the Tax Credit
In 1999, the Maryland Transit Administration (Buddy Alves) and an Annapolis law firm,
Alexander and Cleaver, co-authored the language for the House and Senate bills that were
introduced by Senator Ida Rubin and Delegate Paul Carlson. Testimony in favor of the bill was
received from a large number of environmental groups including the Chesapeake Bay
Foundation, 1000 Friends of Maryland, the Sierra Club, and Environmental Defense. The bills
passed in the House and Senate.
In 2000, an amendment was introduced to close up two loopholes and add additional eligible
expenses to the list. The amendment included a change making only Maryland-based employers
eligible for the credit. It also allowed nonprofits to participate. And it added Guaranteed Ride
Home and Cash In Lieu of Parking as eligible expenses.
Eligible expenses
Transit instruments – pass, farecard, ticket, or voucher used by employees to ride publicly or
privately owned transit systems except taxi services. Employers can purchase transit instruments
from Maryland Transit Administration’s (MTA) Commuter Choice Maryland, Washington
Joblinks | Community Transportation Association of America | 800-527-8279 x734
June 2008
| www.ctaa.org/ntrc/
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Metropolitan Area Transit Authority’s (WMATA) Smart Benefits and Metrocheks, or
Montgomery County, Maryland’s Fare Share programs.
Vanpool and related costs – Invoice cost of expenses to support an employee vanpool including
van purchase/lease, fuel, insurance, maintenance, safety, and equal access upgrades that are paid
directly by the employer. Vanpool expenses are eligible for the tax credit when
•The commute is between an employee’s house and place of employment.
•The van has a seating capacity for at least eight adults.
•At least 80% of the mileage is for the purpose of transporting employees.
•At least one half of the van’s seating capacity is occupied
Guaranteed Ride Home program – Allows employer to offer transportation (taxi, rental car,
company vehicle) to employees currently participating in a commuter choice program (carpool,
vanpool, transit, non-motorized method) who have registered for a guaranteed ride home in case
of an emergency or unscheduled overtime.
Cash in Lieu of Parking program – Allows employer to offer a taxable cash allowance to
employees in an amount equal to the parking subsidy the employer would normally pay or incur
to provide employees parking spaces.
How Employers Take the Credit
Each year, an employer submits a Maryland Commuter Tax Credit registration form to the State
of Maryland or its representative (in this case, Buddy Alves) prior to filing an applicable tax
return and a Form 500CR (specific section for the Commuter Tax Credit modified as applicable)
to apply tax credits toward the total tax liability for the calendar year in which the commuter
choice expenses are paid to or on behalf of participating employees.
Marketing Tips
This is a statewide program, so it can be difficult to reach every employer without some help.
The Comptroller’s Office distributes a booklet on state tax credits and posts the same
information on their web site. Enlisting the help of county ridesharing coordinators, TMA
executive directors, MPO directors, and the MWCOG Commuter Connections manager has
helped spread the word to employers in their respective jurisdictions. But the most effective
method of outreach to employers is through “bottom up” multi-media marketing. By targeting
employees with the message “Ask your boss for Commuter Choice Maryland”, we are able to
put company staffers to work for us. They go to their bosses and let them know about the federal
commuter benefits program and the Maryland Commuter Tax Credit. The bosses call for more
information and we sign them up.
Lessons Learned
The Maryland Commuter Tax Credit bill was introduced to the State Legislature in 1999. I coauthored the legislation and worked closely with a number of special interest groups including
the Sierra Club, 1000 Friends of Maryland, the Chesapeake Bay Foundation, Environmental
Defense, several State senators and delegates to walk the bill through the Senate and the House
to get it passed. We tried to include telecommuting as an eligible expense in our bill, but at the
time there were several bills for telecommuting and the initiators did not want to combine efforts.
Joblinks | Community Transportation Association of America | 800-527-8279 x734
June 2008
| www.ctaa.org/ntrc/
Page 2