Taxation of Fringe Benefits During COVID-19 (Updated Version)

The COVID-19 pandemic and the declaration of a national emergency raises questions about the treatment of various fringe benefits. This includes reimbursement for work at home expenses, paid and unpaid leave, sick pay, dependent care costs, medical expenses, leave sharing arrangements, and disaster relief payments. This session will include a discussion of the tax treatment of benefits employers may provide to employees during the national disaster.

The session will also cover the general rules for fringe benefits including benefits that may be excluded from employee wages as well as benefits that are fully or partially taxable. The rules for exclusion vary for different benefits and even for different taxes with regard to the same benefit. The rules are complex and can be confusing.

For taxable non-cash benefits, valuation can be a complex process and are sometimes subject to special rules. It is also critical to know when to treat a benefit as provided to the employee so that the employer is compliant with tax withholding and deposit requirements. 

Areas Covered

• Fringe benefits under a national emergency declaration
• Benefits provisions under COVID-19 relief legislation
• Fringe benefits that may be excluded from employee wages and requirements for exclusion
• Fringe benefits for which employer expense deductions are limited
• Methods for determining the value of fringe benefits for tax purposes
• When to include taxable benefits in employee compensation: timing and methods
• Tax computation, withholding, deposit and reporting requirements
• Cafeteria (Section 125) plans and Simple Cafeteria Plans
• Changes to fringe benefit taxation under the TCJA and the impact of those changes
• Accountable expense reimbursement plans and why they may more important than ever

Learning Objectives

• Identify special benefits available under COVID and disaster relief
• Identify fringe benefits that may be excluded or partially excluded from employee wages.
• Understand the rules that apply to benefit exclusion from wages.
• Understand limitations on employer tax deductions for certain fringe benefits
• Identify methods used to determine the value of fringe benefits for tax purposes
• Know when and how to include the value of taxable fringe benefits in employee compensation
• Know when and how to compute, withhold, deposit and report taxes for taxable fringe benefits
• Understand the rules for cafeteria (Section 125) plans and Simple Cafeteria Plans
• Understand why an accountable expense reimbursement plan may be more important than ever

Bonus Handouts

• COVID-19-Related Tax Credits
  • Required Paid Leave - Small and Midsize Businesses
  • Paid Sick and Paid Family Leave: Overview
  • Special Issues for Employees
  • Special Issues for Employers
• IRS Pub 15-A Employer’s Supplemental Tax Guide  
  • Section 5: Wages and Other Compensation
  • Section 6: Sick Pay Reporting
  • IRS Pub 15-B Employer’s Tax Guide to Fringe Benefits

Who Should Attend

• Payroll Supervisors and Personnel
• HR Supervisors and Personnel
• Public Accountants
• Internal Auditors
• Tax Compliance Officers
• Enrolled Agents
• Employee Benefits Administrators
• Officers and Managers with Tax or Benefits Compliance Oversight
• Company / Business Owners
• Managers/ Supervisors
• Public Agency Managers
• Audit and Compliance Personnel / Risk Managers

Speaker(s)

Patrick A. Haggerty, EA

Pat Haggerty is a tax practitioner, author, and educator. His work experience includes non-profit organization management, banking, manufacturing accounting, and tax practice. He began teaching accounting at the college level in 1988. He is licensed as an Enrolled Agent by the U. S. Treasury to represent taxpayers at all administrative levels of the IRS and is a Certified Management Accountant. He has written numerous articles and a monthly question and answer column for payroll publications. In addition, he regularly develops and presents webinars and presentations on a variety of topics including Payroll tax issues, FLSA compliance, information returns, and accounting.

CEUs

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Credits: 1.5

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