HR Support on Fringe Benefits

Editor's Note: Keep up with regulations on fringe benefits and other payments!

Rena PirsosOverview: Fringe benefits, such as health benefits, company cars, commuter transportation benefits and educational assistance plans, just to name a few, are the icing on the cake in attracting and retaining high quality employees. In this heavily regulated area, however, employers must stay abreast of frequent payroll tax law changes to prevent an otherwise tax-free fringe benefit from becoming fully taxable. Employers must also look out for changes to the special payroll tax rules that apply to other common types of payments such bonuses, severance pay and back pay.

Trends:

  • Standard mileage rates: The optional standard mileage rates used to calculate the deductible cost of operating a vehicle for business, charitable, and medical or moving purposes and the company fleet maximum valuation amounts have changed for 2014.
  • Qualified transportation fringe benefits: The amounts that may be excluded from an employee's gross income for employer-provided qualified transportation fringe benefits for 2014 have changed from the 2013 amounts. In addition, the parity for mass transit benefits, which was extended by the American Taxpayer Relief Act of 2012, expired at the end of 2013.
  • FICA taxation of severance pay: The US Supreme Court unanimously ruled in United States v. Quality Stores, Inc., No. 12-1408 (U.S. Sup. Ct., 3-25-14), that severance payments made to involuntarily terminated employees that do not qualify as supplemental unemployment benefits under the Internal Revenue Code are subject to Social Security and Medicare (FICA) taxes. The decision overturned a lower court ruling that could have required the Internal Revenue Service to issue more than $1 billion in refunds.
  • Proposed IRS regulations that employers may rely on until finalized: Employees who are not away from home overnight may now be reimbursed for their local lodging expenses as a working condition fringe benefit; the IRS has clarified the definition of a reimbursement or other employee expense allowance arrangement; the IRS has explained the substantial risk of forfeiture conditions for stock transfers made on or after January 1, 2013.

Author: Rena Pirsos, JD, Legal Editor

Latest items in Fringe Benefits

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    Type:
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    Date:
    08 September 2014
    Type:
    News

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    Date:
    25 August 2014
    Type:
    News

    The ruling in Cochran v. Schwan's Home Service, Inc. sheds light on important issues for employers with respect to BYOD (Bring Your Own Device), the practice of allowing employees to use their own personal devices such as cell phones and tablets for work-related purposes.

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    Type:
    Employment Law Manual

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  • State IRC Conformity: Quick Reference Chart, Minnesota Benefits Content Updated

    Date:
    25 April 2014
    Type:
    Editor's Choice

    State references to the definition of "wages" in the Internal Revenue Code that were recently updated in Iowa, Kentucky, Maine, Minnesota, Nebraska, Oregon, South Carolina and West Virginia have been included in the State Internal Revenue Code Conformity - Chart in the Quick Reference Tool. The Taxation of Employee Compensation: Minnesota section of the Employment Law Manual has also been updated.

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    Type:
    Employment Law Manual

    An in-depth review of the spectrum of Minnesota employment law requirements HR must follow in respect to taxation of employee compensation.

  • Taxation of Employee Compensation

    Type:
    Employment Law Manual

    Employees' salary and fringe benefits are subject to federal income taxes, Social Security and Medicare taxes, and federal unemployment insurance tax. However, certain cash and noncash fringe benefits may be offered to employees on a tax-free basis, while an otherwise tax-free fringe benefit becomes taxable compensation to employees if employers do not meet the rules for that particular fringe benefit .This section assists HR professionals in determining which fringe benefits (e.g., company car, health benefits) and other compensation (e.g., bonuses, awards) are taxable or not.

  • Is there a dollar limit on the value of transportation fringe benefits that an employer provides to its employees?

    Type:
    FAQs

  • IRS Further Clarifies Same-Sex Marriage Issues Affecting Cafeteria Plans

    Date:
    23 December 2013
    Type:
    News

    The Internal Revenue Service has issued Notice 2014-1, which further clarifies the various effects of the US Supreme Court's decision in US v. Windsor and IRS Revenue Ruling 2013-17, regarding same-sex marriage, on cafeteria plans, including flexible spending arrangements and health savings accounts.

  • IRS Announces 2014 Inflation Adjustments to Transportation Fringe Benefit Amounts, Standard Deduction and Other Benefits

    Date:
    01 November 2013
    Type:
    News