Employers who require their people to wear specific clothing while on the clock will want to make note of a new ruling from Internal Revenue Service.
Huddle with your CFO and head purchasers: Your organization may be able to exclude those items from wages and treat them as de minimis fringe benefits.
That’s the word out of a recent IRS private letter ruling.
Of course, nothing’s simple when it comes to the Taxman — there are some conditions.
Here are the specifics of this case, and the implications for your company.
This business required its employees to wear a variety of items – hats, polo shirts, even socks – with the company logo on them.
The trouble was, the company purchased the clothing under a master contract from its vendor that included escalation clauses.
That made tracking each and every article of clothing too tough to track for accounting purposes, said the company.
Fortunately for this firm, IRS agreed. The Service ruled those purchases could be considered “de minimis” fringe benefits.
Of course, that doesn’t necessarily mean you can keep Payroll out of all your buys like this. But it’s worth a few followup questions. If your company faces similar accounting difficulties, you may have a case.
Cite: IRS Private Letter Ruling 2010-05014.
Note: PLRs are specifically for the company that requested it, but they give you an idea how IRS is leaning.