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IRS updates fringe benefits Publication 15-B

posted Dec 28, 2010, 10:02 PM by NPROSS Administrator   [ updated Dec 28, 2010, 10:04 PM ]

The 2011 version of IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits, is now on the IRS website at http://www.irs.gov/pub/irs-pdf/p15b.pdf.  The publication contains detailed information on the employment tax treatment of various fringe benefits, including accident and health benefits, employee stock options plans, health savings accounts, meals and lodging expenses, moving expense reimbursements, and transportation (commuting) benefits.

According to page 21 of the publication, an employee will be able to exclude from taxable income up to $230 a month for employer-provided parking expenses (same amount as in 2010). The IRS did not include this figure when it announced the 2011 inflation adjustments for other fringe benefit limitations in Rev Proc 2010-40, 2010-46 IRB 663. The monthly tax-free benefit for employer-provided transit and vanpool benefits will also be $230 in the 2011 tax year due to a provision in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Tax Relief Act) that keeps these amounts equal until Jan. 1, 2012.

There is a table on page six of Publication 15-B that summarizes the differences in the treatment of various fringe benefits for federal income tax withholding (FITW), Social Security and Medicare (FICA), and federal unemployment tax (FUTA) purposes. For example, payments from an employer's adoption assistance plan that meet certain requirements are not subject to FITW. However, the payments are subject to FICA and FUTA tax. There is information in the publication on the provision in the 2010 Patient Protection and Affordable Care Act (Health Care Act) that created a “simple cafeteria plan” for small businesses in tax years beginning after 2010.

Employers must generally determine the value of noncash fringe benefits no later than January 31 of the next year. Before January 31, employers may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. Employers may be subject to a penalty if they underestimate the value of the fringe benefits and deposit less than the amount that they would have had to deposit if the applicable taxes had been withheld. If employers overestimate the value of the fringe benefit and overdeposit, they may either claim a refund or have the overpayment applied to their next Form 941.

IRS Publication 15-B supplements IRS Publication 15 (Circular E), Employer's Tax Guide, and IRS Publication 15-A, Employer's Supplemental Tax Guide.