De Minimis Fringe Benefits

An employer may provide certain property or services of small value to employees without including the value in the employees' income if the following conditions are met:

  1. The value of the benefit is so small that accounting for it would be unreasonable or impractical.
  2. The employer must take into account the frequency with which it provides the benefit to all its employees in making this determination.
  3. The term employee means anyone to whom the benefit is provided.

De minimis fringes may include the following:

  • Occasional tyeping of personal letters by company personnel
  • Occasional personal use of the company copier (no more than 15% of its total use)
  • Occasional parties and picnics for all employees
  • Occasional tickets to sporting events or the theater
  • Traditional holiday gifts (e.g. turkeys, candy) with a small value (no cash or cash equivalents)
  • Coffee and doughnuts provided to employees
  • Occasional use of company telephones for local personal calls
  • Occasional meals, supper money, or cab fare for employees who must work late (cannot be based on the number of hours worked and must be provided to enable the employee to work overtime)
  • Cab fare for employees working other than their usual shift and in unsafe circumstances ($1.50 per one-way commute must be included in income)
  • Operation by the employer of an eating facility on or near the employer's premises (e.g., company cafeteria) if the facility does not operate at a loss (i.e., revenue from employees must at least equal the cost of operating the facility).

No Specific Dollar Maximum

The IRS has never set a specific dollar maximum on the value of a de minimis fringe benefit before it becomes taxable. Each benefit is evaluated in relation to the circumstances at the organization where it is provided. In an internal legal memorandum, the IRS did state plainly that a noncash award with a fair market value of $100 would not qualify as a de minimis fringe because an award of that size was not so small that the employer would have difficulty accounting for it. However, this does not mean that all noncash awards or fringes with a value less than $100 automatically qualify as a diminis fringe benefit. Cashier receipts have a "readily ascertainable" value that can easily be accounted for.

Gift Certificates And Gift Cards Are Not Excludable

Other than occasional meal money or cab fare, cash and cash equivalents do not qualify as de minimis fringes. Gift certificates and gift cards generally would not qualify as de minimis fringes since they are considered cash equivalents, even if the property or service bought with the gift or gift card (if provided in kind) would qualify as a de minimis fringe benefit. Likewise, holiday gift coupons with a specific face value that are redeemable for merchandise at various stores are not a de minimis fringe benefit, even though the coupons could only be used once and any unused portion was forfeited. Gift coupons have a "readily ascertainable" value that can easily be accounted for.

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