“It is not administratively impracticable to account for even a small amount of cash provided to an employee because the value of the amount provided is readily apparent and certain.A congressional committee report provides illustrations of benefits that are excludable as de minimis fringe benefits, including “traditional gifts on holidays of tangible personal property having a low fair market value (e.g., a turkey giving for the year-end holidays).”.Rather, they include: Occasional typing of personal letters by a company secretary occasional personal use of an employer’s copying machine group meals, or picnics for employees and their guests traditional birthday or holiday gifts of property (not cash) with a low fair market value occasional theater or sporting event tickets coffee, donuts, and soft drinks local telephone calls and flowers, fruit, books, or similar property provided to employees under special circumstances (e.g., on account of illness, outstanding performance, or family crisis). The income tax regulations provide several examples of de minimis fringe benefits, and none involves cash. The definition of de minimis fringe benefits in section 132 refers only to “property or services,” and not cash.In support of its conclusion, the IRS cited the following considerations: In this case, there is no difficulty in determining the value or accounting for it each employee that received a gift coupon received a cash equivalent fringe benefit worth $35. Further, the administrative costs associated with determining the value of the benefit and accounting for it may be more expensive than providing the benefit. When an employee attends a staff meeting where two pots of coffee and a box of donuts are provided by the employer, the value of the benefit the employee receives is not certain or easily ascertained. The same conclusion applies to “cash equivalents,” such as gift coupons, even though the property acquired with a coupon would have been a nontaxable de minimis fringe benefit had it been provided by the employer. The IRS concluded that cash can never be a de minimis fringe benefit since it is not “unreasonable or administratively impracticable” to account for its value. Section 132(e)(1) of the tax code defines a de minimis fringe benefit as “any property or service the value of which is so small as to make accounting for it unreasonable or administratively impracticable.” The IRS conceded that taxable income does not include any fringe benefit that qualifies as a de minimis fringe benefit. It rejected the charity’s argument that the coupons were a de minimis fringe benefit that were so low in value that they could be ignored for tax purposes. The IRS ruled that these coupons represented taxable income that should have been added to the employees’ W-2 forms. Get year-end gift ideas for pastors and staff from this article on our sister site, ChurchSalary.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |