Are meal allowances really income to employees?

Article Abstract:

Meal allowances are deemed taxable income to employees when these allowances do not fall under the definition of 'occasional meal money' exceptions specified by Regulation Section 1.132-6(d)(2), as utilized to avail of de minimis fringe benefits exclusion under Section 132(a)(4). This decision is the result of letter ruling TAM 9148001 by the IRS. The ruling called for the employer to have payments reflected on the W-2 forms of employees as part of payment reporting. Consequently, federal employment taxes on the payments were to be withheld and paid by the employer. Regulation Section 1.132-6(b) provides for an 'administratively impracticable' test that can be used to gauge the employer's frequency of providing such a benefit to every employee. A three-segment test for determining de minimis exclusion of meal allowance is discussed.

Laws, regulations and rules, Column, Income tax

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Fringe benefits and lower payroll taxes

Article Abstract:

Employers can minimize their total payroll costs by designing compensation schemes to incorporate fringe benefits not covered by federal, state and local payroll taxes. Those who want to exploit these tax savings from fringe benefit should do so by first studying what fringe benefits are presently being provided to employees before deciding what benefits might be appreciated by employees. They should also be careful to note that some benefits escape payroll taxation but not social security taxes. Employers should also take note that anti-discrimination rule may make the application of fringe benefits improper. Most benefits are covered by anti-discrimination rules, which means that they cannot cater to key employees only. Southwest

Payroll tax

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Should your company adopt an ESOP?

Article Abstract:

Employee stock ownership plans (ESOPs) are benefits plans that provide stock shares to employees of a sponsoring company. ESOPs are created by changing an existing retirement plan, or creating a new one. They can be a stock bonus plan, or a stock bonus plan together with a money purchase pension plan. All general rules that apply to retirement plans apply to ESOPs, and contributions must be put into a qualified trust. Important issues to consider when creating an ESOP include contributions and dividends, employees' and employers' rights, and how borrowing is handled within the plan.

Employee ownership, Managerial accounting

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