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ITG FAQ #3 Answer-Are all employee benefits taxable?

No. The Internal Revenue Code specifically exempts certain fringe benefits for all employers. To be excluded, the conditions and requirements of the applicable Internal Revenue code section must be met.

Employee achievement awards (Treasury Regulation §1.74), group-term life insurance (Treasury Regulation §1.79-0), accident and health plans (Treasury Regulation §1.105-5), qualified scholarships (Treasury Regulation §1.117-1), meals or lodging (Treasury Regulation §1.119-1), cafeteria plans (Treasury Regulation §1.125-2T ), and other legislated fringe benefits are subject to certain conditions and requirements discussed at length in the regulations. In addition, Internal Revenue Code § 132 provides for exclusions from gross income for fringe benefits which qualify as no-additional-cost services, qualified employee discounts, working condition fringes, qualified transportation fringes, or qualified moving expense reimbursement.

Generally, no-additional-cost services are only available to employees with respect to property or services that are offered for sale to customers in the ordinary course of the same line of business in which the employee performs substantial services. There is a detailed discussion of working condition fringes at Treasury Regulation § 1.132-5.

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Page Last Reviewed or Updated: 18-Jan-2017