Wednesday, October 8, 2014

City Council's TransitChek mandate a burden for small businesses

From Crains:

The New York City Council passed a bill Tuesday afternoon to require businesses with 20 or more full-time employees to provide access to a transit tax benefit. The heretofore optional program enables employees to pay for monthly train and bus fares with pretax earnings, potentially saving them hundreds of dollars on annual payroll and income taxes.

Companies, which can also save on payroll taxes but must bear the cost of administering the program, will face fines starting in 2016 unless they can prove hardship.

The transit benefits, typically provided via TransitChek in New York City, are currently used by roughly 1 million New Yorkers. According to its proponents, the new legislation, which now awaits Mayor Bill de Blasio's signature, will provide 450,000 more New Yorkers with access, saving them an average of $443 a year and injecting $50 million into the city economy.

While the savings on pretax income are real for employees, the argument that small businesses will save money as well is less certain. A report by transportation group Riders Alliance estimated that the legislation would save businesses $103 a year in taxes for every employee at the median wage level. But that doesn't take into account that administration of the program must be provided by the businesses, many of which may have to outsource the work.

The legislation creates additional costs in the form of fines for those that fail to abide by the bill. The legislation does allow the city's Department of Consumer Affairs to exempt businesses that demonstrate that compliance will be a financial hardship.

For critics of the bill, the idea of fining companies for failure to provide a costly program that was created by Congress as an option for businesses is yet another example of de Blasio-era legislation that burdens businesses.


Anonymous said...

With all due respect, 20 employees is NOT a small business. And any business that size is already using a payroll processing company, more likely than not. The solution: do not allow the payroll processors to charge for this as a stand-alone service: it should be part of the package offered to employers in NYC, along with FICA, Taxes, etc.

Anonymous said...

This is NOT hard to administer. It's a few buttons someone will have to click in a software package to enable it.

Anonymous said...

who is that boy at the podium...looks like Princess Diana's brother

Anonymous said...

I'm a little confused by this article. The small business I work for (12 people) uses a service called Benefit Resource which works like Transit Check and like the first commenter said, goes hand in hand with out payroll service. There is nothing to outsource. My manager signs onto the site for 5 minutes every 2 weeks and it's done. And the program itself was affordable, we're on a spending hold at the moment but still decided this was in the budget (no new pens though, that's serious business).

I can understand why people could make the case that mandating businesses to do something like this is problematic, but the programs are not expensive or time consuming.

Anonymous said...

Anon #1:
NY State defines small business as having no more than one hundred employees. Ref:
Note than the US SBA defines it as having no more than 500 employees.

Anonymous said...

The problem is having a program like Transit Check in the first place. If you want people to better afford their subway ride, why not just reduce fares or lower taxes? It would be easier and cheaper. But it'll never happen because that would mean less power for the politicians.

Anonymous said...

My company has 4 employees and they offer TransitCheck.

Its really not that hard to do.

Anonymous said...

NY State defines small business as having no more than one hundred employees...the US SBA defines it as having no more than 500 employees.

I was talking about reality, not government definitions. With 20 employees - or even, I daresay, 5 or 10, unless it's a CPA's office a payroll service/program is involved - otherwise, payroll screw-ups will bankrupt the firm in a heartbeat (or a fiscal quarter...)