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Federal Income Taxation of Employee Fringe Benefits
Stith, Kate
Stith, Kate
Abstract
The Department of the Treasury has recently issued a discussion draft of the first comprehensive regulations dealing with the taxation of benefits received by employees from goods, services, facilities, or reimbursements provided by employers. Although the language of section 6i (a) of the Internal Revenue Code, which defines gross income as including "all income from whatever source derived," and the interpretation of this language by the Supreme Court, are broad enough to allow taxation of most of the employment benefits dealt with in the draft regulations, these regulations would continue, for the most part, the present administrative practice of generally excluding incidental employment benefits from gross income. This Note analyzes the difficulties inherent in taxation of employer-provided benefits and reimbursements, focusing on the analogous issues raised by the deduction of employment expenses. The Treasury Department's attempted resolution of these difficulties is evaluated, and alternative rules are suggested which provide both fairer and simpler treatment.