CST Group Partner, Kendall Coleman, recently contributed an article to Constructor Magazine, entitled “What You Need to Know Before You File in 2015.” An excerpt from the article can be seen below.
WHAT YOU NEED TO KNOW BEFORE YOU FILE IN 2015
BY KENDALL COLEMAN
CST GROUP
The IRS is known for cyclical “crackdowns”: periodically selecting a particular rule or regulation and strictly enforcing it for a few tax cycles in order to reset the bar. Over the past few years the IRS has applied a laser-focus to a number of issues that directly affect construction: misclassified workers (independent contractor versus employee), I-9 violations, and most recently, fringe benefits.
WHAT IS A FRINGE BENEFIT?
A fringe benefit is an extra benefit that goes beyond an employee’s salary. A company car, reimbursed meals, reimbursed mileage – all of these common industry expenses are considered fringe benefits. While executives and managers typically see these reimbursements or “perks” as normal parts of business, according to the IRS some of these fringe benefits should be considered part of an employee’s income and are thus taxable.
It’s easy to be confused about which fringe benefits are taxable as compensation to the employee. For example, auto and fuel reimbursements are typically taxable to the employee. But, if the employer adopts an “accountable plan,” then many fringe benefits, such as auto, fuel and meal allowances, may be tax-free to the employee. An “accountable plan” essentially refers to the process of responsible expense reporting: the employee reports expenses incurred while performing services for the employer and the reimbursed amount must match the expenses reported. If not, the IRS will deem those reimbursements as taxable to the employee.
Read the entire article on Constructor Magazine.
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