{"id":1191,"date":"2009-06-23T14:10:42","date_gmt":"2009-06-23T18:10:42","guid":{"rendered":"https:\/\/old.visionpayroll.com\/kb\/?p=1191"},"modified":"2009-06-23T14:10:42","modified_gmt":"2009-06-23T18:10:42","slug":"irs-rules-discounts-offered-to-employees-are-taxable-income","status":"publish","type":"post","link":"https:\/\/old.visionpayroll.com\/kb\/2009\/06\/irs-rules-discounts-offered-to-employees-are-taxable-income\/","title":{"rendered":"IRS Rules Discounts Offered to Employees Are Taxable Income"},"content":{"rendered":"<p class=\"MsoNormal\" style=\"margin: 0in 0in 6pt;\"><span style=\"font-size: 10pt; font-family: Verdana;\">In the recently released <a href=\"https:\/\/old.visionpayroll.com\/kb\/wp-content\/uploads\/2009\/06\/cca-200923029.pdf\" target=\"_blank\">Chief Counsel Advice (CCA) 200923029<\/a>, the\u00a0<a href=\"http:\/\/www.irs.gov\/\" target=\"_blank\">Internal Revenue Service<\/a>\u00a0ruled that discounts provided to an employer\u2019s employees who purchase or lease property from a company that formerly owned the employer are taxable as fringe benefits based on the amount of the discount. Such discounts are also taxable for FICA purposes. FICA is also known as OASDI or social security and Medicare.<\/span><\/p>\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 6pt;\"><span style=\"font-size: 10pt; font-family: Verdana;\">Qualified employee discounts are excludible from income under <a href=\"http:\/\/www4.law.cornell.edu\/uscode\/26\/usc_sec_26_00000132----000-.html\" target=\"_blank\">\u00a7132 of the Internal Revenue Code of 1986 (IRC)<\/a>. Since \u201cthe discounted property was not offered for sale to customers by the same employer for which the employees receiving the discount performed the services\u201d, the discounts were not \u201cqualified employee discounts\u201d under <a href=\"http:\/\/www4.law.cornell.edu\/uscode\/26\/usc_sec_26_00000132----000-.html\" target=\"_blank\">IRC \u00a7132<\/a>. These amounts are to be reported on <a href=\"http:\/\/www.irs.gov\/pub\/irs-pdf\/fw2.pdf\" target=\"_blank\">Form W-2<\/a>, even for former employees. They should not be reported on <a href=\"http:\/\/www.irs.gov\/pub\/irs-pdf\/f1099msc.pdf\" target=\"_blank\">Form 1099<\/a>.<\/span><\/p>\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 6pt;\"><span style=\"font-size: 10pt; font-family: Verdana;\">Since the discount was offered as a percentage off the retail price, the discount may be valued for fringe benefits purposes at the amount of the discount.<\/span><\/p>\n<p class=\"MsoNormal\" style=\"margin: 0in 0in 0pt;\"><span style=\"font-size: 10pt; font-family: Verdana;\">Contact <a href=\"mailto:info@visionpayroll.com\" target=\"_blank\">Vision Payroll<\/a> if you have any questions on taxation of fringe benefits.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the recently released Chief Counsel Advice (CCA) 200923029, the\u00a0Internal Revenue Service\u00a0ruled that discounts provided to an employer\u2019s employees who purchase or lease property from a company that formerly owned the employer are taxable as fringe benefits based on the amount of the discount. Such discounts are also taxable for FICA purposes. FICA is also [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[948,947,949,73,245,321,177,551,178],"_links":{"self":[{"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/posts\/1191"}],"collection":[{"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/comments?post=1191"}],"version-history":[{"count":3,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/posts\/1191\/revisions"}],"predecessor-version":[{"id":1194,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/posts\/1191\/revisions\/1194"}],"wp:attachment":[{"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/media?parent=1191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/categories?post=1191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/tags?post=1191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}