Fringe Benefits

• What is the annual de minimis limit?

The annual de minimis limit is $100 per calendar year. All benefits are cumulative, and Payroll monitors totals. Once an employee exceeds $100, the benefits become taxable.

• Do we report all potentially taxable fringe benefits, even if they may be IRS-excludable?

Yes. All potentially taxable fringe benefits should be reported. Payroll determines taxability based on cumulative totals and IRS rules.

• Is the de minimis limit higher for length-of-service or retirement awards?

Yes. IRS rules allow a $400 threshold for length-of-service or retirement awards.

• Do flowers sent to an employee for a death in the family, or another major life event need to be included on the Fringe Benefit form?

No. Under IRS guidance, items that are low in value, infrequent, reasonable, and provided for personal reasons (customary expected/sympathy/condolence) rather than compensation qualify as de minimis fringes. Sympathy flowers fit squarely in this category. You are not expected to enter those items into the app.

• Do T-shirts given to employees for an event need to be reported?

If the T-shirts are returned after the event: They are not reportable and not taxable (no fringe benefit and no app entry). Returned T-shirts are treated as temporary, job-required uniforms or equipment.

If the T-shirts are kept by the employee: They are potentially a reportable fringe benefit and should be entered in the Fringe Benefits app so taxability can be determined. T-shirts that are kept by employees typically provide personal value, as they are apparel reasonably wearable outside of work, and therefore may constitute taxable fringe benefits.

• Are books provided as part of a professional development event need to be reported?

No. The books provided as part of a structured professional development institute and related programming are generally treated as non-taxable working condition benefits. Professional development books are exempt from taxation when they are:

o Directly related to job-related learning and skill development, and

o Provided primarily for VT’s business purpose and used in ongoing, organized programming.

• Are team lunches that are paid for with foundation funds taxable?

If the lunch has a valid business purpose and is properly justified, it does not need to be entered into the app and is generally not taxable.

• Are departmental meals required to be reported if the fringe benefit application?

If the meal is for a valid business purpose, it may not need to be entered. When in doubt, verify with Payroll.

• Are sporting event tickets taxable?

Sporting event tickets are generally taxable unless they qualify for an IRS exemption. Example: Two tickets for one game during a season may still be taxable unless they meet the “occasional and infrequent” standard.

• Can football tickets for external Advisory Board members be reported in the system?

Yes, if the individual has a “9” number. However, because they are not employees, they will typically receive a 1099 form.

• Would meals and associated costs (rental of room space) for a federal grant research workshop be reportable?

Meals and associated room-rental costs for a federal grant research workshop are generally non-taxable working condition benefits, not fringe benefit, and do not need to be reported in the Fringe Benefits app, when:

o The workshop has a clear research or training purpose tied to the grant

o Attendance is required or expected as part of job duties

o The meals are incidental to the workshop (not stand-alone entertainment)

o The event is not primarily for social purposes

o Room rental is a program expense, not a benefit to individuals

• If Advisory Board members receiving gifts/swag items is considered reportable since they are not employees and if paying for lodging for 3 members who are not in industry to attend the Advisory Board meeting twice a year is considered reportable?

Depending on value and context, gifts or swag, provided to the Advisory Board members, may be treated as a business or meeting expense (if nominal, such as a mug or pin) or as a non-employee gift, which may require 1099 reporting if unusually high in value. If the latter, the item should be reported through the Fringe Benefits app for tracking and reporting purposes.

Lodging paid for non-industry Advisory Board members to attend meetings is not reportable in the Fringe Benefits app, as it is a reasonable business expense incurred to support participation in an official Advisory Board meeting, not compensation.

• If department provided shirts for Advisory Board member and their spouse, how should it be reported?

The department provided shirts should be reported in the Fringe Benefits app under the Advisory Board member’s name so we can track them for potential 1099 reporting, although nominal swag like polos typically does not reach the 1099 threshold. The de minimis fringe benefit rules apply only to employees, so they do not apply to Advisory Board members or their spouses.

• Under what circumstances would University Provided Meals (Direct Billed) be used? Would this apply to any of the following circumstances?

o Employees who attend our yearly holiday reception (refreshments paid through Hokiemart)

o Food provided at other social gatherings (such as retirement gathering, spring picnic, etc.)

o Employees who take donors out to a meal that exceeds M&IE

The University Provided Meals (Direct Billed) category is intended for situations where the university pays directly for a meal that primarily benefits the employee, rather than serving a business, training, or morale purpose. Based on your examples:

o Holiday reception refreshments (HokieMart) are considered occasional group morale events, which are generally non-taxable and do not need to be reported, and do not count toward the de minimis limit.

o Other social gatherings (retirement events, spring picnics, etc.), if they are infrequent, reasonable in value, and open to a group, are typically non-taxable de minimis meals and do not need to be reported on the Fringe Benefit App because they do not count toward the de minimis limit.

o Meals with donors exceeding M&IE are considered business meals with the clear university business purpose, and not a personal benefit. They are not reportable in the Fringe Benefits app, even if the cost exceeds per diem limits (though they still must comply with procurement and grant rules, if any apply).

Examples where “University Provided Meals (Direct Billed)” would apply:

o Meals provided primarily for the employee’s personal benefit, with no clear business purpose

o Routine or frequent meals provided to employees (not occasional, for example the department pays for the employees lunches every week)

o Meals provided to specific employees rather than broadly to a group

o Situations where the university pays for a meal in lieu of compensation

Occasional group events, donor meals, and professional functions generally do not need to be reported. The reporting category is mainly for employee-specific meals that could be considered a personal benefit.

• Do physical award plaques need to be reported?

No. If the plaque includes the recipient’s name and cannot be resold, it does not need to be entered.

• Do promotional items given to employees need to be reported?

o If the item is given with a valid business purpose, it generally does not need to be tracked.

o If the item is a giveaway or gift (swag, t-shirts, etc.) without a business purpose, it must be reported.

• Do scholarships awarded through Scholarship Central need to be entered?

No. Scholarships awarded through Scholarship Central from private funds are covered by the university’s 1098 reporting and do not need to be entered.

• Should gifts not related to length of service or retirement be submitted via the Fringe Benefit app? Is it taxable?

Yes. Without a valid business purpose, these gifts are considered taxable.

• Do we have to report the gifts for students such as GRAs, wage, etc.?

Yes, if the recipient is a student who is also paid by VT (GRA, wage employee, etc.), they are treated as an employee for fringe-benefit purposes, so the same general fringe rules apply.

• Do we report it for the year the invoice is paid instead of the year the items are received?

Generally, you would report it when the employee accepts the item. However, we cannot go back after the year ends and amend W-2 just to add minor fringe benefit. Therefore, we report them in the following year when the information gets to the payroll.

• Are there any regulations about a faculty member giving away a few gift cards to graduate students as prizes for good lab safety out of their own personal money?  If we wanted to do this using a foundation account in the future, is this possible and if so, what would we need to do in order to set up a fund used for prizes/giveaways to students?

If a faculty member uses their own personal money to give gift cards to students, VT has no reporting or tax obligation, as long as no university/Foundation funds are used and the faculty member is not reimbursed. However, the faculty member should be aware of one thing personally: the IRS generally considers gifts from an employer (or someone in an employer-like position of authority, like a faculty supervisor) to a worker to be potential income. If the amounts are small and truly out-of-pocket, the practical risk is very low.

Foundation funds for future prizes: If Foundation funds are used, gift cards are always taxable to the recipient, regardless of amount. There is no de minimis exception for gift cards under IRS rules or VT Procedure 23810.

Because the recipients are graduate students, the Office of University Scholarships and Financial Aid should be consulted before issuing any award, since even small awards may affect cost of attendance or financial aid. Any Foundation-funded award program should also be approved in advance under Policy 4335, with HR involved before moving forward. As a reminder, State/E&G funds cannot be used for this purpose.

• Does the retirement gift need to be reported in the fringe benefit app? 

The answer depends on the type of gift. Current VT Procedure 23810 uses a $100 de minimis threshold for tangible, non-cash gifts, such as a watch, crystal item, or framed item. Tangible non-cash gifts at or under $100 do not require fringe benefit reporting. Tangible non-cash gifts over $100 are taxable, must be reported through the Fringe Benefits app, and taxes are withheld from the employee’s next paycheck. Gift cards are always taxable and must always be reported, regardless of amount.

• The $500 limit in Policy 4335 is a separate gift approval threshold, not a tax threshold: Gifts up to $500 require Dean/VP and HR approval. Gifts over $500 require Provost or Senior VP approval.
• A retirement gift may receive more favorable treatment if it qualifies as a length-of-service award under VT’s Service Recognition Program. If the employee reaches a service milestone in the calendar year, the award may be up to $400 tax-free, provided it is non-cash tangible personal property and not a gift card. The usual once-every-five-years limitation is waived at retirement.
• If the employee does not reach a milestone year but is retiring and is receiving a gift, the standard Policy 4335 retirement recognition rules apply. So, the first step for you is to confirm the employee’s years of service with HR and see if the retirement gift would qualify as a length-of service award.
• Reimbursement through Emburse requires supporting documentation is needed (P154 form, written Dean/VP and HR approval under Policy 4335, the receipt, and a brief description of the gift, fair market value, and recipient).

• Is picking up a Fleet Services vehicle early for business travel taxable?

Generally, no, as long as the vehicle is used strictly for business and there is no personal use.

• Do items processed through Chrome River need to be reported in the app?

No. Any taxable items processed through Emburse are automatically routed to Payroll for taxation. The Fringe Benefit App is for items not processed through Emburse.

• How do taxable fringe benefits appear on paychecks?

They appear as non-cash taxable earnings on the employee’s pay stub.

• Can departments choose the method of taxation(gross-up)?

Departments may choose to gross-up, but they must cover the cost using Foundation funds.

• What happens if something is reported twice?

Payroll reviews all submissions and removes duplicates before determining taxability.

• How are gifts or fellowship payments from third parties handled?

If the university is not involved in selecting the recipient, the third party is responsible for reporting the payment. This applies even when:

o the value is unknown, or

o the payment is sent to a department rather than directly to the employee.

• If we purchase t-shirts or swag with E&G funds and have a business purpose, do we need to track them?

Departments must report on all employee giveaways, regardless of the funding source. Payroll will assess whether the items are taxable once an employee’s total value of received items reaches the de minimis threshold.