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
Updated to include the terminal charge and SIFL mileage rates for the first half of 2017.
Updated to include information on Qualified Small Employer HRAs, effective January 1, 2017.
Updated to reflect 2017 inflation-adjusted amounts.
The IRS has released the 2017 cost-of-living adjustments (COLAs) to the dollar limitations on benefits and contributions to qualified retirement and deferred contribution plans.
The IRS has released Revenue Procedure 2016-55, which provides the annual inflation adjustments to the employer-provided fringe benefit limitations and personal income tax-related amounts.
On September 2, the IRS released immediately effective final regulations that define the term "spouse" in a gender-neutral manner under federal law. The regulations follow up on two Supreme Court decisions that have recognized same-sex marriage at the federal and state levels since 2013.
In the interest of encouraging retirement savings to protect the economic security of older Americans, the Department of Labor's Employee Benefits Security Administration has issued a final rule guiding states on how to design payroll deduction savings initiatives with automatic employee enrollment (auto-IRAs) without being preempted by the Employee Retirement Income Security Act (ERISA). The final rule also provides guidance to the employers that eventually may be required to offer such programs to employees.
Certain District of Columbia employers are required to offer employees tax- or cost-free commuter benefits. Certain employers in New Jersey and Connecticut must comply with the New York City commuter benefits law if they have employees working in New York City.
Payroll tax laws affecting fringe benefits and other common employer payments.