More than token cash

In ordinary times, there’s no downside to what the IRS calls a “qualified commuter transportation fringe benefit,” which most people know by names like TransitChek — programs letting employees set aside money from their paycheck every month for mass transit costs. That money, up to $270 a month, isn’t taxed by the feds, states or localities. The employee/commuter maxing out could save as much as $700 a year.

As we said, no downside, which is why the Daily News has championed the federal tax provision for many years, which matches a companion program allowing up to $270 a month for commuter parking.

Should there be a month here or there that the employee/commuter doesn’t buy that train or bus fare or parking pass, then the money sits and can’t be used until later on, when the commuting resumes. No problem there.

But what happens when a pandemic comes along and the employee/commuter doesn’t buy that train or bus fare or parking pass for a year or longer, or perhaps ever again? Hundreds of pretax dollars can get locked away in special accounts. That’s frustrating enough in normal economic times, and especially bad when so many people are desperate for cash.

That fate now befalls thousands of people in New York and around the nation. Making matters worse, the tax code requires that when an employee and employer part ways, any socked away funds are forfeited. So you lose your job, as millions have this last year, you lose your own money.

Members of Congress have noticed, led by Long Island’s Kathleen Rice. More than six months ago, she was the point person on a delegation push on the IRS. Blah, blah, blah says the taxman to the lawmakers. Clearly not many higher-ups at the IRS set aside commuter cash.

The solution is straightforward: When an employee leaves, unused benefits should be revoked, taxed and then paid out. As for frozen benefits, give current employees the same option of getting a refund, minus withholding.