Page 34 - The EDGE Fall 2022

ANNUAL CONFERENCE & EXPO WRAP-UP

BY DON HARRIS
Lizette Huie Cheryl White
Fringe Benefits— Are They Gifts or Taxable?

Perhaps the biggest question for AASBO members “Maybe the IRS says ‘yes’ but district policy says
regarding a fringe benefit is whether it’s a gift or something else,” Huie said.
is it taxable, and that’s where the IRS and state
regulations come into play. Another issue is the message the purchase sends to
the public. “Look at it from the public perspective,
Lizette Huie, Chief Financial Officer for Sahuarita not just internally,” Huie said. “You’re spending
Unified School District, kicked off the breakout tax resources. Be prepared for questions.”
session at AASBO’s Summer Conference and
Expo by citing IRS Publication 15-B, which Cheryl White, a Consulting Manager with
describes a fringe benefit as “a form of payment Heinfeld Meech, addressed the tax implications.
for the performance of services.” Huie expanded The IRS has many rules regarding when a fringe
on that, saying, “We think of it as an extra benefit benefit is taxable or not. IRS Publication 15-B
supplementing an employee’s normal wages or Employer’s Tax Guide to Fringe Benefits details
salary.” these rules for determining when a fringe benefit is
or is not taxable, as there are some fringe benefits
“You’re spending tax resources. Be that are generally not taxable, including accident

prepared for questions.” – Lizette and health benefits, achievement awards up to
Huie certain limits, and adoption assistance, among
others. The IRS allows de minimis ($100 or
less) benefits to be excluded from an employee’s
Staff regularly makes requests for purchases of wages, thus allowing them to be nontaxable to
such things as food or meals, T-shirts, apparel, the employee, including any property or service,
accessories, gifts for employees and gift cards. such as occasional meals, White explained.
“Are you the Grinch always saying ‘no’ to staff
requests for purchases?” Huie asked. “Why do we “But,” she said, “cash gift cards, gift certificates,
say ‘no’? There are reasons. You need to explain the use of a charge card – there is no de minimis.
the ‘why’ behind those decisions.” Gift cards are taxable, no matter the amount. So,

if it’s taxable, maybe we don’t want to give it to
There are consequences for agreeing to a purchase the employees.”
and questions to ask yourself. For example, does
it violate district policy? “Keep that in mind,” Other nontaxable benefits include educational
Huie said. Other questions include: does it violate assistance (up to $5,250), an employer-provided
the state’s Gift Clause, what funds are allowable, cell phone, group-term life insurance coverage,
and what are the IRS implications? health savings accounts with certain limits,

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34 THE EDGE FALL 2022