NBAA is asking the U.S. Internal Revenue Service (IRS) to guard against double taxation on certain benefits as it updates rules surrounding transportation fringe and commuting benefits to meet congressional mandates. The IRS in June released proposed guidance that would address the elimination of the deduction for expenses related to certain transportation and commuting benefits provided by employers to their employees.

That elimination comes at the behest of the 2017 Tax Cuts and Jobs Act (TCJA), which sought to close a loophole that had enabled employers to deduct certain qualified transportation fringe (QTF) benefits from their taxable income even if employees were able to exclude them from taxable income.

However, NBAA expressed concern that the elimination of the QTF benefits deduction would extend to cases where the employees must claim them as taxable income. Such a scenario would constitute double taxation, NBAA said.

“Under the policy of avoiding double taxation, NBAA requests that regulations provide that if the value of the commuting benefit is reported by the employer as compensation to the employee, then the employer should be permitted to deduct the cost of the commuting benefit as compensation expense,” the association said in comments to the IRS. “Adopting such a regulation is consistent with the regulatory approach taken with respect to the spouse travel disallowance in…the fringe benefit rules generally which are structured to avoid double taxation.”

NBAA also said the proposed rulemaking could unintentionally apply the deduction limits on communing expenses to business travel, particularly in cases where an employee works in more than one place.

“There is no indication that Congress intended to apply this disallowance to business travel from an employee’s residence to a secondary place of employment, which is not commuting. This potential effect...should be addressed through regulations to prevent the unintended consequence of disallowing deductible business travel,” NBAA said.