26 U.S.C. § 132 : US Code - Section 132: Certain fringe benefits

Search 26 U.S.C. § 132 : US Code - Section 132: Certain fringe benefits

(a) Exclusion from gross income
Gross income shall not include any fringe benefit which qualifies
as a -
(1) no-additional-cost service,
(2) qualified employee discount,
(3) working condition fringe,
(4) de minimis fringe,
(5) qualified transportation fringe,
(6) qualified moving expense reimbursement,
(7) qualified retirement planning services, or
(8) qualified military base realignment and closure fringe.
(b) No-additional-cost service defined
For purposes of this section, the term "no-additional-cost
service" means any service provided by an employer to an employee
for use by such employee if -
(1) such service is offered for sale to customers in the
ordinary course of the line of business of the employer in which
the employee is performing services, and
(2) the employer incurs no substantial additional cost
(including forgone revenue) in providing such service to the
employee (determined without regard to any amount paid by the
employee for such service).
(c) Qualified employee discount defined
For purposes of this section -
(1) Qualified employee discount
The term "qualified employee discount" means any employee
discount with respect to qualified property or services to the
extent such discount does not exceed -
(A) in the case of property, the gross profit percentage of
the price at which the property is being offered by the
employer to customers, or
(B) in the case of services, 20 percent of the price at which
the services are being offered by the employer to customers.
(2) Gross profit percentage
(A) In general
The term "gross profit percentage" means the percent which -
(i) the excess of the aggregate sales price of property
sold by the employer to customers over the aggregate cost of
such property to the employer, is of
(ii) the aggregate sale price of such property.
(B) Determination of gross profit percentage
Gross profit percentage shall be determined on the basis of -

(i) all property offered to customers in the ordinary
course of the line of business of the employer in which the
employee is performing services (or a reasonable
classification of property selected by the employer), and
(ii) the employer's experience during a representative
period.
(3) Employee discount defined
The term "employee discount" means the amount by which -
(A) the price at which the property or services are provided
by the employer to an employee for use by such employee, is
less than
(B) the price at which such property or services are being
offered by the employer to customers.
(4) Qualified property or services
The term "qualified property or services" means any property
(other than real property and other than personal property of a
kind held for investment) or services which are offered for sale
to customers in the ordinary course of the line of business of
the employer in which the employee is peforming (!1) services.
(d) Working condition fringe defined
For purposes of this section, the term "working condition fringe"
means any property or services provided to an employee of the
employer to the extent that, if the employee paid for such property
or services, such payment would be allowable as a deduction under
section 162 or 167.
(e) De minimis fringe defined
For purposes of this section -
(1) In general
The term "de minimis fringe" means any property or service the
value of which is (after taking into account the frequency with
which similar fringes are provided by the employer to the
employer's employees) so small as to make accounting for it
unreasonable or administratively impracticable.
(2) Treatment of certain eating facilities
The operation by an employer of any eating facility for
employees shall be treated as a de minimis fringe if -
(A) such facility is located on or near the business premises
of the employer, and
(B) revenue derived from such facility normally equals or
exceeds the direct operating costs of such facility.
The preceding sentence shall apply with respect to any highly
compensated employee only if access to the facility is available
on substantially the same terms to each member of a group of
employees which is defined under a reasonable classification set
up by the employer which does not discriminate in favor of highly
compensated employees. For purposes of subparagraph (B), an
employee entitled under section 119 to exclude the value of a
meal provided at such facility shall be treated as having paid an
amount for such meal equal to the direct operating costs of the
facility attributable to such meal.
(f) Qualified transportation fringe
(1) In general
For purposes of this section, the term "qualified
transportation fringe" means any of the following provided by an
employer to an employee:
(A) Transportation in a commuter highway vehicle if such
transportation is in connection with travel between the
employee's residence and place of employment.
(B) Any transit pass.
(C) Qualified parking.
(2) Limitation on exclusion
The amount of the fringe benefits which are provided by an
employer to any employee and which may be excluded from gross
income under subsection (a)(5) shall not exceed -
(A) $100 per month in the case of the aggregate of the
benefits described in subparagraphs (A) and (B) of paragraph
(1), and
(B) $175 per month in the case of qualified parking.
(3) Cash reimbursements
For purposes of this subsection, the term "qualified
transportation fringe" includes a cash reimbursement by an
employer to an employee for a benefit described in paragraph (1).
The preceding sentence shall apply to a cash reimbursement for
any transit pass only if a voucher or similar item which may be
exchanged only for a transit pass is not readily available for
direct distribution by the employer to the employee.
(4) No constructive receipt
No amount shall be included in the gross income of an employee
solely because the employee may choose between any qualified
transportation fringe and compensation which would otherwise be
includible in gross income of such employee.
(5) Definitions
For purposes of this subsection -
(A) Transit pass
The term "transit pass" means any pass, token, farecard,
voucher, or similar item entitling a person to transportation
(or transportation at a reduced price) if such transportation
is -
(i) on mass transit facilities (whether or not publicly
owned), or
(ii) provided by any person in the business of transporting
persons for compensation or hire if such transportation is
provided in a vehicle meeting the requirements of
subparagraph (B)(i).
(B) Commuter highway vehicle
The term "commuter highway vehicle" means any highway vehicle
-
(i) the seating capacity of which is at least 6 adults (not
including the driver), and
(ii) at least 80 percent of the mileage use of which can
reasonably be expected to be -
(I) for purposes of transporting employees in connection
with travel between their residences and their place of
employment, and
(II) on trips during which the number of employees
transported for such purposes is at least 1/2 of the
adult seating capacity of such vehicle (not including the
driver).
(C) Qualified parking
The term "qualified parking" means parking provided to an
employee on or near the business premises of the employer or on
or near a location from which the employee commutes to work by
transportation described in subparagraph (A), in a commuter
highway vehicle, or by carpool. Such term shall not include any
parking on or near property used by the employee for
residential purposes.
(D) Transportation provided by employer
Transportation referred to in paragraph (1)(A) shall be
considered to be provided by an employer if such transportation
is furnished in a commuter highway vehicle operated by or for
the employer.
(E) Employee
For purposes of this subsection, the term "employee" does not
include an individual who is an employee within the meaning of
section 401(c)(1).
(6) Inflation adjustment
(A) In general
In the case of any taxable year beginning in a calendar year
after 1999, the dollar amounts contained in subparagraphs (A)
and (B) of paragraph (2) shall be increased by an amount equal
to -
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year
begins, by substituting "calendar year 1998" for "calendar
year 1992".
In the case of any taxable year beginning in a calendar year
after 2002, clause (ii) shall be applied by substituting
"calendar year 2001" for "calendar year 1998" for purposes of
adjusting the dollar amount contained in paragraph (2)(A).
(B) Rounding
If any increase determined under subparagraph (A) is not a
multiple of $5, such increase shall be rounded to the next
lowest multiple of $5.
(7) Coordination with other provisions
For purposes of this section, the terms "working condition
fringe" and "de minimis fringe" shall not include any qualified
transportation fringe (determined without regard to paragraph
(2)).
(g) Qualified moving expense reimbursement
For purposes of this section, the term "qualified moving expense
reimbursement" means any amount received (directly or indirectly)
by an individual from an employer as a payment for (or a
reimbursement of) expenses which would be deductible as moving
expenses under section 217 if directly paid or incurred by the
individual. Such term shall not include any payment for (or
reimbursement of) an expense actually deducted by the individual in
a prior taxable year.
(h) Certain individuals treated as employees for purposes of
subsections (a)(1) and (2)
For purposes of paragraphs (1) and (2) of subsection (a) -
(1) Retired and disabled employees and surviving spouse of
employee treated as employee
With respect to a line of business of an employer, the term
"employee" includes -
(A) any individual who was formerly employed by such employer
in such line of business and who separated from service with
such employer in such line of business by reason of retirement
or disability, and
(B) any widow or widower of any individual who died while
employed by such employer in such line of business or while an
employee within the meaning of subparagraph (A).
(2) Spouse and dependent children
(A) In general
Any use by the spouse or a dependent child of the employee
shall be treated as use by the employee.
(B) Dependent child
For purposes of subparagraph (A), the term "dependent child"
means any child (as defined in section 152(f)(1)) of the
employee -
(i) who is a dependent of the employee, or
(ii) both of whose parents are deceased and who has not
attained age 25.
For purposes of the preceding sentence, any child to whom
section 152(e) applies shall be treated as the dependent of
both parents.
(3) Special rule for parents in the case of air transportation
Any use of air transportation by a parent of an employee
(determined without regard to paragraph (1)(B)) shall be treated
as use by the employee.
(i) Reciprocal agreements
For purposes of paragraph (1) of subsection (a), any service
provided by an employer to an employee of another employer shall be
treated as provided by the employer of such employee if -
(1) such service is provided pursuant to a written agreement
between such employers, and
(2) neither of such employers incurs any substantial additional
costs (including foregone revenue) in providing such service or
pursuant to such agreement.
(j) Special rules
(1) Exclusions under subsection (a)(1) and (2) apply to highly
compensated employees only if no discrimination
Paragraphs (1) and (2) of subsection (a) shall apply with
respect to any fringe benefit described therein provided with
respect to any highly compensated employee only if such fringe
benefit is available on substantially the same terms to each
member of a group of employees which is defined under a
reasonable classification set up by the employer which does not
discriminate in favor of highly compensated employees.
(2) Special rule for leased sections of department stores
(A) In general
For purposes of paragraph (2) of subsection (a), in the case
of a leased section of a department store -
(i) such section shall be treated as part of the line of
business of the person operating the department store, and
(ii) employees in the leased section shall be treated as
employees of the person operating the department store.
(B) Leased section of department store
For purposes of subparagraph (A), a leased section of a
department store is any part of a department store where over-
the-counter sales of property are made under a lease or
similar arrangement where it appears to the general public that
individuals making such sales are employed by the person
operating the department store.
(3) Auto salesmen
(A) In general
For purposes of subsection (a)(3), qualified automobile
demonstration use shall be treated as a working condition
fringe.
(B) Qualified automobile demonstration use
For purposes of subparagraph (A), the term "qualified
automobile demonstration use" means any use of an automobile by
a full-time automobile salesman in the sales area in which the
automobile dealer's sales office is located if -
(i) such use is provided primarily to facilitate the
salesman's performance of services for the employer, and
(ii) there are substantial restrictions on the personal use
of such automobile by such salesman.
(4) On-premises gyms and other athletic facilities
(A) In general
Gross income shall not include the value of any on-premises
athletic facility provided by an employer to his employees.
(B) On-premises athletic facility
For purposes of this paragraph, the term "on-premises
athletic facility" means any gym or other athletic facility -
(i) which is located on the premises of the employer,
(ii) which is operated by the employer, and
(iii) substantially all the use of which is by employees of
the employer, their spouses, and their dependent children
(within the meaning of subsection (h)).
(5) Special rule for affiliates of airlines
(A) In general
If -
(i) a qualified affiliate is a member of an affiliated
group another member of which operates an airline, and
(ii) employees of the qualified affiliate who are directly
engaged in providing airline-related services are entitled to
no-additional-cost service with respect to air transportation
provided by such other member,
then, for purposes of applying paragraph (1) of subsection (a)
to such no-additional-cost service provided to such employees,
such qualified affiliate shall be treated as engaged in the
same line of business as such other member.
(B) Qualified affiliate
For purposes of this paragraph, the term "qualified
affiliate" means any corporation which is predominantly engaged
in airline-related services.
(C) Airline-related services
For purposes of this paragraph, the term "airline-related
services" means any of the following services provided in
connection with air transportation:
(i) Catering.
(ii) Baggage handling.
(iii) Ticketing and reservations.
(iv) Flight planning and weather analysis.
(v) Restaurants and gift shops located at an airport.
(vi) Such other similar services provided to the airline as
the Secretary may prescribe.
(D) Affiliated group
For purposes of this paragraph, the term "affiliated group"
has the meaning given such term by section 1504(a).
(6) Highly compensated employee
For purposes of this section, the term "highly compensated
employee" has the meaning given such term by section 414(q).
(7) Air cargo
For purposes of subsection (b), the transportation of cargo by
air and the transportation of passengers by air shall be treated
as the same service.
(8) Application of section to otherwise taxable educational or
training benefits
Amounts paid or expenses incurred by the employer for education
or training provided to the employee which are not excludable
from gross income under section 127 shall be excluded from gross
income under this section if (and only if) such amounts or
expenses are a working condition fringe.
(k) Customers not to include employees
For purposes of this section (other than subsection (c)(2)), the
term "customers" shall only include customers who are not
employees.
(l) Section not to apply to fringe benefits expressly provided for
elsewhere
This section (other than subsections (e) and (g)) shall not apply
to any fringe benefits of a type the tax treatment of which is
expressly provided for in any other section of this chapter.
(m) Qualified retirement planning services
(1) In general
For purposes of this section, the term "qualified retirement
planning services" means any retirement planning advice or
information provided to an employee and his spouse by an employer
maintaining a qualified employer plan.
(2) Nondiscrimination rule
Subsection (a)(7) shall apply in the case of highly compensated
employees only if such services are available on substantially
the same terms to each member of the group of employees normally
provided education and information regarding the employer's
qualified employer plan.
(3) Qualified employer plan
For purposes of this subsection, the term "qualified employer
plan" means a plan, contract, pension, or account described in
section 219(g)(5).
(n) Qualified military base realignment and closure fringe
For purposes of this section -
(1) In general
The term "qualified military base realignment and closure
fringe" means 1 or more payments under the authority of section
1013 of the Demonstration Cities and Metropolitan Development Act
of 1966 (42 U.S.C. 3374) (as in effect on the date of the
enactment of this subsection) to offset the adverse effects on
housing values as a result of a military base realignment or
closure.
(2) Limitation
With respect to any property, such term shall not include any
payment referred to in paragraph (1) to the extent that the sum
of all of such payments related to such property exceeds the
maximum amount described in clause (1) of subsection (c) of such
section (as in effect on such date).
(o) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section.