Insights

In February 2020, the IRS released an updated version of Publication 5137, Fringe Benefit Guide. This publication was created by the IRS to help determine the correct tax treatment of employee fringe benefits, including using the appropriate withholding and reporting procedures.

As background, in late 2019 the IRS released the 2020 IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits (see our January 22, 2020 Compliance Corner article). Publication 15-B provides an overview of the taxation and exclusion rules applicable to employee benefits such as accident and health benefits, dependent care assistance, HSAs and group term life insurance coverage. (The guide also includes the related valuation, withholding and reporting rules.)

The updated Publication 5137 Fringe Benefit Guide incorporates any changes from the most recent Publication 15-B (as described in our prior Compliance Corner article). Importantly, it is an additional tool for employers and covers topics such as:

• How to determine whether specific types of benefits or compensation are taxable
• Procedures for computing the taxable value of fringe benefits
• Rules for withholding federal income, Social Security and Medicare taxes from taxable fringe benefits
• Reporting of the taxable value of fringe benefits on Forms W-2, Wage and Tax Statement, and 1099-MISC, Miscellaneous Income
• How to contact the IRS with questions on taxation and reporting requirements

Employers should be aware of the availability of the updated publication for guidance when administering fringe benefits.

IRS Fringe Benefit Guide »
IRS Publication 15-B »