IRS Publication 15-B (Employer’s Tax Guide to Fringe Benefits (For Use in 2020))
Available at https://www.irs.gov/pub/irs-prior/p15b–2020.pdf
Publication 15-B has been revised for 2020 with a few changes that supplement and clarify its summaries of common fringe benefits. Here are highlights:
Form 1099-NEC. The publication notes that the IRS has a new form for reporting nonemployee compensation. Form 1099-NEC will apply to nonemployee compensation paid in 2020 and is due February 1, 2021. Form 1099-MISC is used for nonemployee compensation paid in 2019.
Qualified Nonpersonal Use Vehicles. The publication’s list of qualified nonpersonal use vehicles—i.e., vehicles that can be used tax-free for any purpose because they are generally unsuited to personal use—includes several clarifications. Marked police, fire, and public safety vehicles must be subject to a policy prohibiting personal use other than for commuting. Personal use of unmarked law enforcement vehicles must be authorized and related to a law enforcement function—vacations and recreation do not qualify. And the exclusion for buses applies only to the driver, not to riders.
Company Cars. The publication includes the maximum vehicle value for determining whether the business standard mileage rate can be used in 2020 to value an automobile’s personal use. It also references a transition rule for 2018 and 2019 for vehicles with values in excess of the much lower pre-2018 maximum values.
Employee Discounts. The publication explains that employers may provide excludable discounts indirectly through third parties, and includes an example under which a manufacturer’s employees benefit from discounts given by a retail seller of the employer’s product.
No-Additional-Cost Services. The publication clarifies that “substantial additional costs” that would prevent benefits provided under a reciprocal agreement from being excludable include lost revenue.
Group-Term Life Insurance. A reminder has been added that if an employer provides former employees with taxable life insurance benefits, the employer need not collect the former employees’ share of their Social Security and Medicare taxes, but the employer still must pay its share.
The 2020 version of Publication 15-B also provides the 2020 dollar amounts for various benefit-related limits and definitions, including the monthly limits under qualified transportation plans; the limit on health FSA salary reductions; limits related to QSEHRAs (for the transportation, health FSA, and QSEHRA amounts, see our Checkpoint article); HSA-related limits and thresholds (see our Checkpoint article); and the 2020 standard mileage rate for valuing the personal use of employer-provided vehicles (see our Checkpoint article).
EBIA Comment: Publication 15-B typically changes little from year to year. The Tax Cuts and Jobs Act (TCJA) was largely incorporated in 2018 (see our Checkpoint article), and further changes were not needed in response to repeal of the TCJA provision requiring certain transportation benefits to be treated as unrelated business taxable income (see our Checkpoint article) because previous versions of Publication 15-B did not include the provision. Note that Publication 15-B does not provide complete coverage of the many benefits it summarizes. For more information on the various fringe benefits covered in Publication 15-B , see EBIA’s Fringe Benefits manual at Sections IV (“Company Cars and Related Benefits”), IX (“Qualified Employee Discount Programs”), XIV (“Group-Term Life Insurance”), and XXIV.B (“No-Additional-Cost Services”). For more information on HSAs and HRAs (including QSEHRAs), see EBIA’s Consumer-Driven Health Care manual at Section II (“Consumer-Driven Health Care: The Short Course”); and for more information on cafeteria plans, health FSAs, and DCAPs, see EBIA’s Cafeteria Plans manual at Section V (“Types of Cafeteria Plans & How They Work”).
Contributing Editors: EBIA Staff.