2012-31384. Notice of Transportation Services' OMB Designation, timely return of excess transit benefits to the Treasury, and stakeholder notification of the minimum internal controls

AGENCY:

Office of the Secretary, DOT.

ACTION:

Notice.

SUMMARY:

On April 27, 2012, the Office of Management and Budget (OMB) designated the U.S. Department of Transportation's (DOT) Office of Transportation Services (TRANServe), located within the Office of the Assistant Secretary for Administration, as the lead Federal Agency by to facilitate the timely return of any excess transit benefits accumulating on vanpool companies' accounts to the Treasury and to prevent the future accumulation of excess transit benefits, among other things. As the lead Federal agency, TRANServe is directed to inform commercial vanpool companies of the Federal internal controls that now govern the Transit Benefit Program to prevent future accumulations, and assist in the timely return of the current excess transit benefits. Thus, the following notice sets forth the process for returning excess transit benefits, as well as the minimum internal controls that have been developed for operating a compliant transit benefit program as it relates to van pools.

FOR FURTHER INFORMATION CONTACT:

Ms. Denise P. Wright, Business Office Manager, and for information regarding Funds Recovery contact Ms. Craig Bellet, Working Capital Fund—Office of Financial Management 1200 New Jersey Avenue SE., Washington DC 20590.

SUPPLEMENTARY INFORMATION:

I. Background

On April 21, 2000, Executive Order 13150 directed all federal agencies to develop a transportation fringe benefit program that offered qualified Federal employees the option to exclude from taxable wages and compensation employee commuting costs incurred through the use of mass transportation and vanpools. Since their development, these transit benefit programs have become an important tool in addressing urban roadway congestion. However, they were only designed to subsidize employees' costs for using public transportation to travel between their residence and place of employment. These benefits are calculated on a monthly basis as required under 26 CFR 1.132-9, and as such, employees are not permitted to accumulate benefits in excess of their actual monthly commuting costs or to use accumulated benefits to offset commuting costs in subsequent months. Furthermore, overestimating transit costs, giving or selling transit benefits to others, or purchasing transit benefits from unauthorized sources is prohibited. Employees who misuse transit benefits are subject to appropriate administrative action, including discipline and disqualification from the Federal Transit Benefit Program.

In 2011, the Office of Management and Budget (OMB) was advised that excess transit benefits may have been accumulating in programs that allow transit benefits to be used for vanpool services between employees' residences and their places of employments. On April 27, 2012, OMB directed that these excess funds be returned to the U.S. Department of the Treasury and that federal agencies strengthen internal controls to ensure compliance with the Federal Transit Benefit Program. To accomplish these directives, OMB designated the DOT, Office of Assistant Secretary for Administration, as the lead Federal agency to inform commercial vanpool companies of the Federal internal controls that govern the Transit Benefit Program and to assist in the timely return of the Federal funds. Pursuant to the OMB direction, TRANServe is responsible for the recovery of the excess transit benefit provided to van pool riders including both customers of TRANServe and those riders who received the transit benefit through other channels. TRANServe has also worked with senior leadership of the relevant Federal agencies to further define the necessary controls that should be in place to operate a compliant transit benefit program. The process for recovering the existing excess funds, as well as the controls that have been developed to prevent future excess accumulations, is described below.

II. Funds Recovery Process

This section presents the process for the timely return of the Federal funds. Pursuant to 26 CFR 1.132-9, qualified transportation fringe benefits are calculated on a monthly basis. Therefore, employees are not permitted to accumulate fare media in excess of their actual monthly commuting costs or to use accumulated fare media (acquired with tax-exempt subsidies) to offset commuting costs in the future. In this instance, accumulated fare media in excess of the actual monthly commuting costs means Federal funds held on account over and above the certified eligible monthly amount, which have the potential to be used to offset commuting costs in the future. Van pool providers and/or operators that have retained funds in excess of the allotted monthly amount must return the excess funds by April 27, 2013 or 120 days from date of this notice, whichever is greater. All excess funds should be returned via the Web site www.pay.gov. To remit payment via www.pay.gov, in the “Find Public Forms” search box, type “DOTWCF” in the search field and select “DOT OST Working Capital Fund Miscellaneous Payments” from the query list. Complete all fields with the requested information. In the “reason for payment” field, select “other” and enter the following statement in the information box: “Unused van pool funding by federal participants.” At the same time the funds are returned via www.pay.gov, the following information should also be transmitted via email to [e-mail], to assist the responsible agency in auditing transaction activity: ^[1]

i. Name and location of vanpool operator

ii. Funds origin, to include agency and location

iii. Dollars segregated by agency

The email subject line should state “Pay.gov Van Pool Funds Remittance.” Also include a copy of the emailed receipt you receive from www.pay.gov. Van Pool providers and/or operators shall encrypt the data in order to protect it during transmission. Once received, DOT shall handle the data in accordance with the security controls identified in the DOT's System of Records Notice, DOT/ALL 8 Employee Transportation Facilitation, 65 FR 19482 (April 11, 2000).

III. Minimum Internal Controls

To ensure that funds are not accumulated in excess of the allotted monthly amount, we have also worked with other federal agencies to develop the following internal controls for the management of the Federal Transit Benefit Program. These controls will ensure effective and efficient operations, reliability of financial reporting, and compliance with applicable laws and regulations. The controls are provided as tools to help federal transit benefit program and financial managers achieve results and safeguard the integrity of their programs. Federal agency program administration should be built around these core principles and monitored accordingly. The internal controls listed are general controls and agency policy and procedure may be more prescriptive with the following internal controls serving as the minimum standard. For the purposes of this notice with respect to the minimum internal controls, the following definitions are applicable:

Federal Van Pool Driver—an individual owner or transportation servicer of a qualified IRS van pool and/or a Federal employee operating a vehicle. The Federal Van Pool Driver may be the primary member listed for qualified parking.

Federal Van Pool Operator—an individual having primary responsibility as identified through a contractual relationship with the Van Pool Provider. The Federal Van Pool operator may be the primary member listed for qualified parking.

Federal Van Pool Provider—an entity which contractually offers the use of a vehicle (van) to a Federal Van Pool Operator meeting the van pool qualifications set forth in 26 CFR § 1.132-9 26.

The minimum internal controls include the following:

1. The agency transit benefit program must provide the ability for all participants to adjust the monthly transit benefit amount.

2. With respect to van pools, the agency transit benefit program manager should verify that the van pool is registered or certified by the local transit authority, where applicable. While agency transit benefit program managers have no authority to require van pool registration or certification by local transit authorities, some State and local transit authorities require van pool registration and certification. This administrative process should be leveraged to ensure statutory and regulatory compliance as well as transit authority compliance.

3. The agency transit benefit program manager should maintain a list of van pool vendors utilized by agency participants, to include the name of the driver or operator, van pool business name, address, and phone number. The list of van pool vendors, with driver and operator identified, should be cross referenced and validated to ensure consistency and accuracy with the agency van pool participants receiving the transit benefit. Van pool operators or drivers are to provide this information directly to the agency transit benefit program manager.

4. Van pool drivers and operators who use qualified parking consistent with 26 CFR 1.132-9, or are named on a workplace parking permit, are not eligible to receive the transit benefit. However, the allowable cost for the driver and/or operator may be covered as part of the operating expenses attributed to the van pool.

5. The transit benefit cannot be used to hold a seat on the van pool in the event of participant absence. All participants must utilize the van pool for commuting to and from work at least 50% of eligible work days.

6. The van pool must seat a minimum of 6 passengers (not including the driver), and must have at least 50% of the adult seating capacity of the vehicle (not including the driver) used for the transportation of employees to and from work representing 80% of the usage of the van.

7. The agency transit benefit program manager must be provided a published price list by the Federal van pool driver or operator, which is applicable to all riders (federal and non-federal). As established by the Federal van pool driver or operator, the published costs should include all necessary fees. Updated price lists should be provided to the agency transit benefit program manager as prices are changed or modified.

8. In the event a transit program receives a rider subsidy from a transit authority, the appropriate participant offset must be applied to the individual monthly benefit amount.

9. A van pool invoice or receipt is required to document the actual commuting cost for individual van pool participants.

The internal controls described above should prevent individuals from accruing transit benefits in excess of the allotted monthly amount, as required by 26 CFR 1.132-9.

Issued in Washington, DC on December 27, 2012.

Marie Petrosino-Woolverton,

Director, Office of Financial Management & Transportation Services.

Footnotes

1.  Pursuant to 5 CFR 1320.3(h), this is not considered to be information as defined under the Paperwork Reduction Act, 44 U.S.C. chapter 35.