IRS Issues
The Internal Revenue Service (IRS) has determined school districts and ESDs as well
as other municipal corporations and state agencies may not be in compliance with all
IRS regulations affecting them. We are working with the IRS and WASBO to provide
training to school district personnel, hopefully in mid to late June.
In the meantime, the following is provided to assist school districts and ESD’s with tax
related issues. Resources for answers are found in many places, the Internal Revenue
Code (IRC), US Treasury Regulations, IRS Publications, IRS Revenue Procedures, IRS
Revenue Rulings, the IRS Website, and through calling IRS for taxpayer assistance. We
have provided some resources below, although this is not intended to be a complete
listing.
Fringe Benefit Resource List
Federal Per Diem Rates
Federal rates can be found in the current IRS Publication 1542 or on the Internet
at the following addresses:
• For High Cost Locations-Continental USA:
http://www.policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.shtml –
General Services Administration–Per Diem Rates
• For High Cost Locations-Non continental USA and Foreign Locations
http://www.state.gov/www/perdiems/index.html
Federal Agencies to Call
•
•
•
•
•
•
IRS Taxpayer Information - 1-800-829-1040
IRS Taxpayer Information (TDD) – 1-800-829-4059
IRS Taxpayer Information – 1-877-777-4778 (For assistance with longstanding tax issues)
IRS Forms Ordering – 1-800-829-3676
IRS Forms Ordering (TDD) – 1-800-829-4059
IRS Portland Office – 1-503-326-7441 (FAX number for government
assistance)
Internet
http://www.irs.ustreas.gov/prod/cover.html (US Treasury-IRS)
(Look for the IRS Newstand)
http://www.fedworld.gov/ (Fedworld Information Network)
(Good for searching, locating, ordering and acquiring government and business
information)
IRS Regulations
1
2/15/2000
Modem
IRS Bulletin Board – 1-304-264-7070
Social Security Administration
Tim Beard – 1-206-615-2125, FAX 1-206-615-2643
IRS Publications
Pub #
Title
15
Circular E, Employer’s Tax Guide
15-A
Employer’s supplemental Tax Guide
463
(Replaces 971)
Travel, Entertainment, Gift and Car Expense
(Business use of car, now Chapter 4)
508
Educational Expenses
521
Moving Expenses
525
Taxable and Nontaxable Income
526
Charitable Contributions
535
Business Expenses
970
Tax Benefits for Higher Education
New publications are generally available after the first of the year. Call the IRS Forms
number and make sure you ask for the newest publication. You can also find out when
new publications are available through the IRS Internet site.
Order IRS publications by calling 1-800-829-3676.
IRS Code (IRC) Sections Pertaining to Fringe Benefits
Note: More than one IRC can pertain to the same benefit.
General
IRC §132
General exclusion section for non taxable fringe benefits, only
applies if another IRC section does not
IRC §117(d)
Qualified tuition reductions
IRC §119
Meals or lodging for employer’s convenience
IRC §119(d)
Lodging for educational institutions, qualified campus lodging
IRC §125
Cafeteria plans
IRC §127
Educational assistance programs
IRC §129
Dependent care assistance program
IRC §274
Substantiation
IRS Regulations
2
2/15/2000
Travel
IRC §162(a)(2)
IRC §62(c)
IRC §132
IRC §274(h)(2)
Overnight Rule “Away From Home”, Reimbursed meals
while on business, deductibility criteria
Employer’s election not to withhold income tax on personal
use of vehicles, must inform employee and include on W-2
General rule for meal allowances/reimbursements
Reimbursed meals while not in travel status
Cruises
Moving Expenses
IRC §82
IRC §217
IRC 217(b)
IRC §162
IRC §3101
IRC §3401
Moving expenses, general rule
Moving expenses, general rule, employer
Reasonable moving expenses
Moving expenses, when employee claims
Moving expenses, employment taxes on employee
Employer’s qualified plan
IRC §3402(s)(I)
Transportation
IRC §132(f)(1)
IRC §132(f)(5)(E)
IRC §132(f)(5)(B)
IRC §132(f)(2)(A)
IRC §132(f)(5)(A)
IRC §132(f)(2)(C)
IRC §132(f)(2)(B)
IRC §132-6(d)(2)
IRC §132-6(d)(2)(A)
IRC §132-6(d)(2)(B)
IRC §132-6(d)(2)(iii)(A)
IRC §132-6(d)(2)(iii)(B)
Awards and Prizes
IRC §74(a)
IRC §3121(a)(20)
IRC §274(j)
IRC §132(e)
IRC §74(b)
IRC §414(q)
IRC §274(j)(2)
Bonuses
IRC §61
IRC §3101
IRS Regulations
Transportation expenses, general rule
“Employee” defined
Definition of commuter highway vehicles
Dollar limitations
Transit Pass, definition
Qualified parking, definition
Parking, dollar limitation
Cab fare
Defines “occasional”
Defines “overtime”
Special rule for unusual circumstances and unsafe
condition
Defines “unusual circumstances”
General rule
Taxable unless specifically excluded
Qualified employee achievement awards (length of service
and safety) (See also IRC §74(c)(1))
Nominal holiday or special occasion gifts
Exceptions for prizes and awards transferred to charities
Must be plan, cannot discriminate in favor of highly
compensated employees
Valuation of award, may require appraisal
General rule
Employer taxation/deductions for compensation. Bonuses
are supplemental compensation.
3
2/15/2000
IRS Revenue Procedures (Rev. Proc.)
Rev. Proc. 98-64
Rev. Proc. 97-59
“Overnight rule”, first and last day of travel, standard meal
(per diem) allowance, prorated allowance for partial travel
days
When deemed “substantiated” by IRS
IRS Treasury Regulations (Reg.)
General
Reg. §1.132-6(d)(4)
Reg. §1.62-2(a)(4)
De Minimus Benefits, cliff provision (if determined not to be
de minimus entire benefit taxed)
Timeliness Requirements
Non accountable plans
Funds advanced to employee not repaid on final
accounting to employer are considered received (and
taxable) to employee
Receipts not required (except for lodging) if substantiation
met
Payments to employee taxable if no accountable plan
Transportation
Reg. §1.62-2(a)
Reg. §1.274-5T
Reg. §1.274-5T(c)(1)
Reg. §1.61-21
Reg. §1.132-6(d)(3)
Reg. §1.61-21(d)
Reg. §1.61-21(d)(4)
Reg. §1.61-21(d(5)(v)
Reg. §1.61-21(e)
Reg. §1.61.21(f)
Reg. §1.274-5T(k)
Reg. §1.132-5(h)
Reg. §1.274-6T(a)(2)
Reg. §1.274-6T(a)(3)
Transportation expenses
Federal mileage rate
Substantiation requirements
Employer vehicle used party for business/partly personal
Defines infrequent, irregular situations
Automobile lease valuation rule
Daily lease value (vehicles)
Fleet average value
Vehicle cents-per mile rule
Commuting valuation rule
Qualified non personal use vehicle
Qualified non personal use vehicle
Vehicles not used for personal purposes
Vehicles not used for personal use other than commuting
Reg. §1.62-2(g)
Reg. §1.62-2(c)3)
Reg. §1.82-1(a)(2)
Reg. §1.274(d)-(1)(a)
Meal Reimbursement
Reg. §1.62-2(c)(4)
Reg. §1.62-2(c)(5)
Reg. §1.62-2(c)& (d)
Reg. §1.274-5T(b)(2)
Reg. §1.62-2(f)
Reg. §1.274-2(c) and (d)
Reg. §1.274-5T(3) & (4)
Reg. §1.119-1
IRS Regulations
Meals under accountable plan
Meals not paid under accountable plan
Accountable plan rule requirements
Substantiation (meals)
Timely return of excess payment within reasonable time
Meals with business meetings
“Entertainment” meal reimbursements (also §1.274
generally)
Overtime meal allowance
4
2/15/2000
Moving Expenses
Reg. §1.82-1(a)(3)
Reg. §1.217-2(b)(4)
Reg. §1.217-2(a)(2)
Travel Advances
Reg. §1.62-2(c)(4)
Reg. §1.62-2(g)(3)
Reg. §1.62-2(h)(2)
Reg. §1.62-2(f)(1)
Reg. §1.62-2(g)
Reg. §1.62-2(g)(2)
Reg. §1.62-2(h)(2)
Moving expense payments can be direct or indirect (to
employee or to third party on behalf of employee)
Costs of travel deductible and non deductible
Prior year’s expenses-payments by employer-employee
options
Accountable plan definition/requirements
Multiple travel advances, tracking and accountability
Amounts in excess of expenses not returned subject to
employment taxes
Advances unsubstantiated or not returned
Determination of “reasonable time” period for advances
Safe harbors
Advances that cross a calendar year
Independent Contractor Reimbursement
Reg. §1.274-5T(h)
Payments under accountable plan not reported on 1099
Reg. §1.274-5T(h)(2)
Accountable plan requirements
Allowances
Reg. §1.62-2(c)(1)
Non taxable reimbursement, disposition of excess amounts
Charitable Contributions
Reg. §1.170A-13(f)
Substantiation requirements
Professional Licenses, Organization Dues
IRC §212
General rule, ordinary and necessary business expenses
IRC §162
Deductible as business expense on employee’s 1040.
IRC §132
Fringe benefit if paid by the employer
IRC §62
If paid under accountable plan non taxable to employee
IRC §3101
Subject to tax if not under accountable plan and
reimbursed
IRC §274
Recordkeeping requirements
IRC §274(a)(3)
Entertainment and recreational organizations do not qualify
IRC §274(a)
Dues must be paid for business reasons
IRS revenue Rulings (Rev. Rule)
Rev Rule 86-97
Rev Rule 78-200
Rev Rule 93-86
Vans and pickups unlikely to have personal use
Delayed moves
Taxpayer home (official residence)
IRS Revenue Notice (Rev. Notice)
Rev Notice 94-3
Vanpools
IRS Revenue Announcements (Annc.)
Annc. 85-113
IRS Regulations
Employer’s election to defer withholding on personal use of
vehicle (paid on pay date, quarterly, semi-annual or annual
basis)
5
2/15/2000