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Fringe Benefit question.

Our Human Resources Department is offering a $50.00 gift certificate for participating in a biometric screening. That will be taxable. They are also offering a $50.00 reduction in the cost of a Healthy Artery Screening. The Healthy Artery Screening will be completed during an upcoming Employee Health Fair.
This year you’ll have a choice of incentive:
 A $50 gift card to Dick’s Sporting Goods
 $50 reduction in the cost of the Healthy Artery Screening
Would the $50.00 reduction in the cost of the Healthy Artery Screening also be taxable? If yes, can you send me in the right direction of where the regulation stating that would be in writing?

Thank you,

John

Comments

  • I can point you at IRS pub 15B. It is too early in the day to think about regulations. The only way it would be taxable if it is directed at Highly Compensated Employees only. Or your employer is a complete idiot. The health care rules are very heavily stacked toward non-taxable, and the employer has to go out of their way to blow that.

  • The problem here is that the employee has the choice of receiving a health benefit or a gift card (cash item) and generally where the employee has the option to receive cash rather than a non-taxable benefit (except under a Section 125 (cafeteria) plan, the benefit is taxable even if it would otherwise be non-taxable.

    Pub 15-B page 3
    A cafeteria plan, including an FSA, provides participants an opportunity to receive qualified benefits on a pre-tax
    basis. It is a written plan that allows your employees to choose between receiving cash or taxable benefits, instead
    of certain qualified benefits for which the law provides an exclusion from wages. If an employee chooses to receive a qualified benefit under the plan, the fact that the employee could have received cash or a taxable benefit instead won't make the qualified benefit taxable

    Not sure where in the code or regs it says that the option to receive cash in lieu of the benefit makes the other benefit taxable - I don't have time to look for it right now.

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