Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 16
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33nonhighly compensated employee than for a highly com-
camp located in a foreign country, see section 119(c) of the
pensated employee. A highly compensated employee for
Internal Revenue Code and its regulations.
2012 is an employee who meets either of the following
tests.
For your convenience. Whether or not you furnish lodg-
ing for your convenience as an employer depends on all
1. The employee was a 5% owner at any time during
the facts and circumstances. You furnish the lodging to
the year or the preceding year.
your employee for your convenience if you do this for a
substantial business reason other than to provide the em-
2. The employee received more than $115,000 in pay
ployee with additional pay. This is true even if a law or an
for the preceding year.
employment contract provides that the lodging is furnished
You can choose to ignore test (2) if the employee was not
as pay. However, a written statement that the lodging is
also in the top 20% of employees when ranked by pay for
furnished for your convenience is not sufficient.
the preceding year.
Condition of employment. Lodging meets this test if you
Partnerships and S corporations. Partners and 2%
require your employees to accept the lodging because
shareholders of an S corporation are not eligible for salary
they need to live on your business premises to be able to
reduction (pre-tax) contributions to an HSA. Employer con-
properly perform their duties. Examples include employ-
tributions to the HSA of a bona fide partner or 2% share-
ees who must be available at all times and employees who
holder are treated as distributions or guaranteed payments
could not perform their required duties without being fur-
as determined by the facts and circumstances.
nished the lodging.
It does not matter whether you must furnish the lodging
Cafeteria plans. You may contribute to an employee’s
as pay under the terms of an employment contract or a law
HSA using a cafeteria plan and your contributions are not
fixing the terms of employment.
subject to the statutory comparability rules. However, cafe-
teria plan nondiscrimination rules still apply. For example,
Example. A hospital gives Joan, an employee of the
contributions under a cafeteria plan to employee HSAs
hospital, the choice of living at the hospital free of charge or
cannot be greater for higher-paid employees than they are
living elsewhere and receiving a cash allowance in addition
for lower-paid employees. Contributions that favor
to her regular salary. If Joan chooses to live at the hospital,
lower-paid employees are not prohibited.
the hospital cannot exclude the value of the lodging from
her wages because she is not required to live at the
Reporting requirements. You must report your contribu-
hospital to properly perform the duties of her employment.
tions to an employee’s HSA in box 12 of Form W-2 using
code “W.” The trustee or custodian of the HSA, generally a
S corporation shareholders. For this exclusion, do not
bank or insurance company, reports distributions from the
treat a 2% shareholder of an S corporation as an employee
HSA using Form 1099-SA, Distributions from an HSA,
of the corporation. A 2% shareholder is someone who
Archer MSA, or Medicare Advantage MSA.
directly or indirectly owns (at any time during the year)
more than 2% of the corporation’s stock or stock with more
Lodging on Your Business Premises
than 2% of the voting power. Treat a 2% shareholder as
you would a partner in a partnership for fringe benefit
You can exclude the value of lodging you furnish to an
purposes, but do not treat the benefit as a reduction in
employee from the employee’s wages if it meets the follow-
distributions to the 2% shareholder.
ing tests.
•
Meals
It is furnished on your business premises.
•
It is furnished for your convenience.
This section discusses the exclusion rules that apply to de
•
The employee must accept it as a condition of em-
minimis meals and meals on your business premises.
ployment.
Different tests may apply to lodging furnished by educa-
De Minimis Meals
tional institutions. See section 119(d) of the Internal Reve-
You can exclude any occasional meal or meal money you
nue Code for details.
provide to an employee if it has so little value (taking into
The exclusion does not apply if you allow your employee
account how frequently you provide meals to your employ-
to choose to receive additional pay instead of lodging.
ees) that accounting for it would be unreasonable or ad-
ministratively impracticable. The exclusion applies, for
On your business premises. For this exclusion, your
example, to the following items.
business premises is generally your employee’s place of
•
work. For special rules that apply to lodging furnished in a
Coffee, doughnuts, or soft drinks.
Page 16
Publication 15-B (2012)
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