Delivery: Text Based
Credit Hours: 3
Field of Study: Federal Tax Update
Approval: IRS, CTEC
There is much discussion about options to reduce the federal deficit through tax reform. One item that
continues to be a hot-spot is the treatment of "fringe benefits." The business deductions and employee
income exclusion of qualified fringe benefits reduce federal income tax revenues considerably.
The Revenue Act of 1913 provided that taxable net income "shall include gains, profits, and
income derived from salaries, wages, or compensation for personal service of whatever kind and
in whatever form paid…"
By 1921, the IRS had issued nonstatutory exclusions to taxable income such as certain employer-
provided meals and lodging, employee death benefits, group-term life insurance payments, and
rail passes provided to off-duty railroad employees and their families.
Almost a decade after World War II, IRC Section 106 provided that gross income "does not
include employer-provided coverage under an accident or health plan."
Over the years, inconsistent application of such exclusions turned fringe benefits into an area of
confusion and ever-increasing complexity.
The Tax Cuts and Job Act (TCJA) has begun the process to realign the tax treatment of various
Under the TCJA, the business deduction and employee income exclusion of certain
transportation benefits have been modified. Transportation benefits represent a 2018 projected
$5 billion reduction in #mtax expenditures#m. (In comparison, the 2018 tax expenditure
projection due to the business deduction and employee income exclusion of employer-provided
health care benefits is $173 billion.) [Source: Joint Committee on Taxation, Estimates of
Federal Tax Expenditures for Fiscal Years 2016-2020 (JCX-3-17), January 30, 2017.]
Due to the broad array of fringe benefits, this 3-CE hour self-study course addresses selected
basic level fringe benefit topics.
After completing the course, you will be able to:
- Identify the new provisions under the TCJA pertaining to fringe benefits
- Identify how to report taxable fringe benefits
- Identify what can be included in a cafeteria plan
- Identify the rules that apply to various employee fringe benefits
- Identify the guidelines for withholding, depositing, and reporting taxable and nontaxable fringe benefits