UPDATED PUBLICATION 15-B REFLECTS NUMEROUS CHANGES FOR 2016
Posted by Kim Chen on January 15th, 2016
Publication 15-B, Employer’s Tax Guide to Fringe Benefits, for use in 2016.
IRS has recently released an updated version of Publication 15-B, Employer’s Tax Guide to Fringe Benefits, for use in 2016. It reflects a number of changes, including several from the newly enacted “Protecting Americans from Tax Hikes (PATH) Act of 2015.”
RIA observation: The recently updated Publication 15, (Circular E), Employer’s Tax Guide, to which Publication 15-B is a supplement, was covered in an earlier article (see Weekly Alert ¶ 11 12/31/2015).
Publication 15-B contains detailed information on the employment tax treatment of various fringe benefits, including accident and health benefits, employee stock option plans, health savings accounts, meals and lodging expenses, moving expense reimbursements, and transportation (commuting) benefits.
The “What’s New” section of Publication 15-B includes the standard mileage rate that an employer can use under the “cents-per-mile rule” to value the personal use of a vehicle it provides to an employee in 2016—54¢, down from 57.5¢ for 2015 (see Weekly Alert ¶ 33 12/24/2015).
It also provides that the monthly exclusion for excludible commuter highway vehicle transportation and transit passes was retroactively increased for 2015 to $250—i.e., to equal that for excludible parking benefits—and that the 2016 monthly exclusion for both qualified parking and commuter highway vehicle transportation and transit passes is $255. (See Weekly Alert ¶ 50 12/24/2015 for the permanent extension of the increase in transit benefits, and Weekly Alert ¶ 8 09/24/2015 for prior coverage of the inflation adjustments to qualified transportation fringe benefits.)
RIA observation: As it has in past years when parity between mass transit and parking benefits was retroactively revived (see, e.g., Notice 2015-2, 2015-4 IRB 334), IRS doubtless will issue guidance on how employers should handle the retroactive 2015 increase.
There is a table on page 6 of the publication that summarizes the differences in the treatment of various fringe benefits for federal income tax withholding (FITW), Social Security and Medicare (FICA), and federal unemployment tax (FUTA) purposes. For example, payments from an employer’s adoption assistance plan that meet certain requirements are not subject to FITW. However, the payments are subject to FICA and FUTA tax.
Employers must generally determine the value of noncash fringe benefits no later than January 31 of the next year. Before January 31, employers may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. Employers may be subject to a penalty if they underestimate the value of the fringe benefits and deposit less than the amount that they would have had to deposit if the applicable taxes had been withheld. If employers overestimate the value of the fringe benefit and over deposit, they may either claim a refund or have the overpayment applied to their next Form 941.
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