IRS Provides Early Draft of 2020 Fringe Benefits Guide

On November 26, 2019, the IRS provided an early release draft of the 2020 IRS Publication 15-B, the Employer’s Tax Guide to Fringe Benefits. This publication provides an overview of the taxation of fringe benefits and applicable exclusion, valuation, withholding, and reporting rules.

As background, the IRS modifies Publication 15-B each year to reflect any recent legislative and regulatory developments. Additionally, the revised version provides the applicable dollar limits for various benefits for the upcoming year. As standard procedure, the IRS releases a preliminary draft of the updated guide prior to final publication.

Among the changes for 2020 is a new Form 1099-NEC. The Form 1099-NEC will be used to report nonemployee compensation paid in 2020 and will be due on February 1, 2021. However, employers reporting nonemployee compensation paid in 2019 should continue to use Form 1099-MISC, which is due January 31, 2020.

With respect to 2020 annual limits, the monthly exclusion for qualified parking is $270 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $270. For plan years beginning in 2020, the maximum salary reduction permitted for a health FSA under a cafeteria plan is $2,750.

Employers should be aware of the changes reflected in the early release of the fringe benefits guide. The IRS is accepting comments regarding the proposed publication. Accordingly, employers should also recognize that some changes to the released draft may occur prior to finalization.

Publication 15-B »