It may be easy to miss given all of the big-ticket items in tax reform, but embedded in the bill are important changes to certain widely-offered fringe benefits. Now that the holidays are past us, it’s a good time to check on whether any of your offerings are impacted.
As you may recall, the original House and Senate versions of the tax bill overhauled a significant number of fringe benefit programs. The final bill, however, stripped out many of the earlier changes but left a few in. Below is a high-level outline of impacted fringe benefit programs:
- Moving Expenses: Both the individual moving expense deduction and Qualified Moving Expense Reimbursement exclusion from income are suspended for the 2018 through 2025 tax years.
- Paid Family and Medical Leave: Employers may earn a credit if they provide paid FMLA time.
- Bicycle Programs: The Qualified Bicycle Commuting Reimbursement exclusion from income is suspended for tax years 2018 through 2025.
- Entertainment: The employer deduction for certain forms of employer-provided entertainment, amusement and recreation expenses is repealed effective 2018.
- Qualified Transportation Benefits: Disallows the employer deduction for these expenses, except to the extent necessary for ensuring employee safety.
- Food & Beverage: Applies a 50% deduction limitation for employers who provide meals to employees via employer-operated facilities.
- Employee Achievement Awards: This one is interesting, in that earlier versions of the bill would have made these awards taxable for recipients. The final bill made a much more modest change in that it clarified items not considered tangible personal property and the Conference Report (H. Rept. 115-466) makes clear that there is no intended change to present law / guidance.
Fortunately, the list of impacted fringe benefit items is not long; however, certain of these fringes (e.g., moving expense reimbursements) are relatively common among employers. Given the 2018 effective date for the changes, it’s a good idea to coordinate with internal resources to see which, if any, of these programs may be affected, and to determine next steps with HR, tax and accounting.