Page 8 - The Edge - Winter 2021

AASBO 2020 VIRTUAL ANNUAL
CONFERENCE WRAP-UP
BY DON HARRIS
Michael Lauzan Jill Barragan
Fringe Benefits – To Tax or Not to Tax

Sorting through federal and state rules governing myriad Other IRS examples of low-cost benefits include
fringe benefits can be a taxing effort, so AASBO has occasional meals, meal money or transportation for
provided its members with guidelines to follow and working overtime, flowers and fruit for a special
ways to avoid pitfalls. occasion, like an employee promotion, and personal use
of a cell phone provided by the employer for business
The key is knowing which fringe benefits are taxable and purposes.
which are not, according to Michael Lauzon, a CPA with
Heinfeld Meech, and Jill Barragan, Executive Director “De minimis generally is less than $25,” Barragan said,
for Business Services, Avondale Elementary School “but a previous IRS ruling is less than $100. So what is
District. In a breakout session during the AASBO 2020 de minimis in Arizona? Pretty much nothing. I’m not
Virtual Annual Conference, they explained the difference sure why.”
between what the IRS considers a fringe benefit and
what the state of Arizona allows. She recommended checking Arizona Attorney General
opinions and the state Constitution regarding the gift
The list includes de minimis (minimum value) fringe of public funds. “The Attorney General website is your
benefits, achievement awards, transportation benefits, friend,” Barragan said. “There are very few things
travel, insurance, uniforms/clothing, and meals. Fringe outside the gift of public funds. Be very careful of those
benefits are a form of pay for performance or services, things. If you receive a stipend for using your personal
Barragan said. An employee is considered the recipient cell phone, it can be taken as evidence to check e-mails,
of a fringe benefit even if it is provided to someone who calls and text messages. I recommend having a personal
didn’t perform the service, like a family membership at phone and a district phone.”
a gym. For an achievement award, you can’t give them
an expensive car or watch, Barragan said. What is never considered de minimis? Barragan
mentioned such no-nos as cash, gift cards and season
To the IRS, the term de minimis means a benefit “so tickets to sporting or theatrical events. There’s more.
small and infrequent that it would make accounting for You can’t use a district vehicle to commute more than
it unreasonable or impractical,” Barragan said. Snacks one day a month, and membership of an athletic club is
are OK and so is the occasional use of a photocopier, but not a low-cost benefit.
Barragan cautioned against two others the IRS approves
– an occasional ticket to an entertainment event and You can’t give a long-time employee who is retiring a
holiday gifts. “Those last two (tickets and gifts) are not real gold watch, a gift card, a meal at a fancy restaurant
things you want to do in school districts,” she said. or an overnight stay at a resort. A plaque is OK, and “an

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8 THE EDGE WINTER 2021