Overview: 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.
Author: Rena Pirsos, JD, Legal Editor
The IRS has issued Revenue Ruling 2014-32 (Rev. Rul.) providing guidance on the tax consequences of employer use of smartcards, debit or credit cards, or other electronic media to provide qualified transportation fringe benefits to employees. The Rev. Rul. also discusses whether mandatory delivery charges employees incur when ordering vanpool vouchers are qualified transportation fringe benefits.
Employee benefits, such as health insurance, sick pay, disability pay, workers' compensation insurance and retirement savings plans, may be subject to withholding for federal income taxes (FIT), Social Security and Medicare (FICA) taxes or federal unemployment (FUTA) taxes. This section assists HR professionals in understanding how each particular type of benefit plan must be structured and how to properly tax and report contributions, reimbursements and distributions in order to ensure compliance with the Internal Revenue Code.
The IRS has adopted as final regulations that clarify proposed regulations issued in 2012 allowing employers to reimburse employees who are not away from home overnight for their local lodging expenses as a tax-free working condition fringe benefit (rather than a taxable personal expense) under the Internal Revenue Code.
This chart provides employers with a comparison of the current and prior year retirement plan cost of living adjustments and fringe benefit limitations. It helps employers ensure that they are withholding the correct amount of taxes from the pay of employees who receive various benefits. The chart will be updated annually when new amounts are announced by the Internal Revenue Service, which is usually by the end of October.
The IRS has announced the annual cost-of-living adjustments made to several employee benefits and taxable amounts, based on changes to the Consumer Price Index. These are the maximum amounts that may be excluded in 2015 from an employee's taxable income for specific benefits.
Employers seeking to advise employees that they will offer educational assistance as a benefit and encourage employees to continue professional development through advanced training and education should consider including this model policy statement in their handbook.
An in-depth review of the spectrum of Wisconsin employment law requirements HR must follow in respect to Taxation of Employee Benefits.
The US Department of Transportation has released the aircraft terminal charge and standard industry fare level (SIFL) mileage rates for the second half of 2014. The rates are used by the Internal Revenue Service to determine the value of noncommercial flights on employer-provided aircraft under the aircraft valuation method for withholding tax purposes.
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.
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.
Payroll tax laws affecting fringe benefits and other common employer payments.