Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 30
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33by Employer in section 7 of Publication 15-A. Do not use
Election not to withhold income tax. You can choose
withheld federal income tax to pay the social security and
not to withhold income tax on the value of an employee’s
Medicare tax.
personal use of a highway motor vehicle you provided. You
do not have to make this choice for all employees. You can
Special accounting rule. You can treat the value of tax-
withhold income tax from the wages of some employees
able noncash benefits as paid on a pay period, quarterly,
but not others. You must, however, withhold the applicable
semi-annually, annually, or on another basis, provided that
social security and Medicare taxes on such benefits.
the benefits are treated as paid no less frequently than
You can choose not to withhold income tax on an
annually. You can treat the value of taxable noncash fringe
employee’s personal use of a highway motor vehicle by:
benefits provided during the last two months of the calen-
•
dar year, or any shorter period within the last two months,
Notifying the employee as described below that you
as paid in the next year. Thus, the value of taxable non-
choose not to withhold, and
cash benefits actually provided in the last two months of
•
Including the value of the benefits in boxes 1, 3, 5,
2011 could be treated as provided in 2012 together with
and 14 on a timely furnished Form W-2. For use of a
the value of benefits provided in the first 10 months of
separate statement in lieu of using box 14, see the
2012. This does not mean that all benefits treated as paid
Instructions for Forms W-2 and W-3.
during the last two months of a calendar year can be
deferred until the next year. Only the value of benefits
The notice must be in writing and must be provided to
actually provided during the last two months of the calen-
the employee by January 31 of the election year or within
dar year can be treated as paid in the next calendar year.
30 days after a vehicle is first provided to the employee,
Limitation. The special accounting rule cannot be
whichever is later. This notice must be provided in a man-
used, however, for a fringe benefit that is a transfer of
ner reasonably expected to come to the attention of the
tangible or intangible personal property of a kind normally
affected employee. For example, the notice may be mailed
held for investment or a transfer of real property.
to the employee, included with a paycheck, or posted
where the employee could reasonably be expected to see
Conformity rules. Use of the special accounting rule is
it. You can also change your election not to withhold at any
optional. You can use the rule for some fringe benefits but
time by notifying the employee in the same manner.
not others. The period of use need not be the same for
each fringe benefit. However, if you use the rule for a
Amount to report on Forms 941 (or Form 944) and W-2.
particular fringe benefit, you must use it for all employees
The actual value of fringe benefits provided during a calen-
who receive that benefit.
dar year (or other period as explained under
Special ac-
If you use the special accounting rule, your employee
counting
rule, earlier in this section) must be determined by
also must use it for the same period you use it. But your
January 31 of the following year. You must report the
employee cannot use the special accounting rule unless
actual value on Forms 941 (or Form 944) and W-2. If you
you do.
choose, you can use a separate Form W-2 for fringe
You do not have to notify the IRS if you use the special
benefits and any other benefit information.
accounting rule. You may also, for appropriate reasons,
Include the value of the fringe benefit in box 1 of Form
change the period for which you use the rule without
W-2. Also include it in boxes 3 and 5, if applicable. You
notifying the IRS. But you must report the income and
may show the total value of the fringe benefits provided in
deposit the withheld taxes as required for the changed
the calendar year or other period in box 14 of Form W-2.
period.
However, if you provided your employee with the use of a
Special rules for highway motor vehicles. If an em-
highway motor vehicle and included 100% of its annual
ployee uses the employer’s vehicle for personal purposes,
lease value in the employee’s income, you must also
the value of that use must be determined by the employer
report it separately in box 14 or provide it in a separate
and included in the employee’s wages. The value of the
statement to the employee so that the employee can com-
personal use must be based on fair market value or deter-
pute the value of any business use of the vehicle.
mined by using one of the following three special valuation
If you use the special accounting rule, you must notify
rules previously discussed in section 3.
the affected employees of the period in which you used it.
•
You must give this notice at or near the date you give the
The lease value rule.
Form W-2, but not earlier than with the employee’s last
•
The cents-per-mile rule.
paycheck of the calendar year.
•
The commuting rule (for commuting use only).
Page 30
Publication 15-B (2012)
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