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ISSUE 2
U.S. Practitioner Perspective:
By: Fred A. Basehore, Jr., CPP
Over and over, we in Payroll in the U.S. are put in the uncomfortable position of telling those in management: “Yes, boss. This fringe benefit is taxable.”
Service generally requires it to be:
For years our employers have tried to persuade us that the small benefits they provide employees can be excluded from employment taxes because they fall under an allowable legal exception called a “de minimis fringe.” Even small amounts of cash. It is true there are items that can be excluded under the law, but it is the interpretation that employers in the U.S. continually get wrong. Under Section 132 of the U.S. Internal Revenue Code , one category of nontaxable employee benefits is the de minimis fringe. De minimis means small. But in this context, the Internal Revenue
1. A benefit with a small value that also is unreasonable or impractical to record for accounting purposes. 2. A benefit that is generally tangible (can be books, flowers, neckties, blenders, for example), and the employer must consider the frequency with which it provides the benefit to its employees. 3. The term employee means anyone to whom the benefit is provided. Key to all this is that tax-free de minimis fringes need to be “unreasonable or impractical” to administer for accounting purposes.
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