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Fringe Benefits - Can I use Special Accounting Period?

Our HR department just brought over a list of employees that received vouchers for Fitbits. They received the vouchers in late December. Are we able to use the Special Accounting Period for vouchers? I keep seeing it can only be used for Noncash fringes, but was wondering if someone had experience correctly applying that rule to cash/gift cards/vouchers for wellness initiatives.

-John

Comments

  • From: IRS Pub 15-B
    Special accounting rule.
    You can treat the value of taxable noncash benefits as paid on a pay period, quarter, semiannual, annual, or other basis, provided that the benefits are treated as paid no less frequently than annually. You can treat the value of taxable noncash fringe benefits provided during the last 2 months of the calendar year, or any shorter period within the last 2 months, as paid in the next year. Thus, the value of taxable noncash benefits actually provided in the last 2 months of 2019 could be treated as provided in 2020 together with the value of benefits provided in the first 10 months of 2020. This doesn't mean that all benefits treated as paid during the last 2 months of a calendar year can be deferred until the next year. Only the value of benefits actually provided during the last 2 months of the calendar year can be treated as paid in the next calendar year.

    Limitation.
    The special accounting rule can't be used, however, for a fringe benefit that is a transfer of tangible or intangible personal property of a kind normally held for investment or a transfer of real property.

    Conformity rules.
    Use of the special accounting rule is optional. You can use the rule for some fringe benefits but not others. The period of use need not be the same for each fringe benefit. However, if you use the rule for a particular fringe benefit, you must use it for all employees who receive that benefit.

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