Taxation and Reporting for Non-Salary Payments Guidance

Function:

Payment Taxation Compliance (PTC)

Procedure

Taxation and Reporting for Non-Salary Payments Procedure

Contact:

Ned Gellner

Guidance for Taxable Non-Salary Payments

The Research Foundation for SUNY ("RF") may pay Non-Salary costs or benefits that are considered taxable and/or reportable by the Internal Revenue Service ("IRS").

Some common examples of taxable Non-Salary Payments include:

Examples of Effective Monitoring

Example 1- Business Expenses - Cell Phone

You hear in a meeting that a project is planning to reimburse project staff for business use of their personal cell phone. Since the cell phone is not a company provided cell phone, you explain that the reimbursements might be taxable and reportable if it does not meet certain IRS audit guidelines. You explain that if the reimbursements do not meet the IRS audit guidelines, the transaction requires processing through the payroll process because tax withholding rules must be applied and the amounts must be included in the employee W-2 Wages and Tax Statement. If a reimbursement payment has already occurred within AP, complete the Non-Salary Payment Determinations form and follow the procedure instructions.

Example 2- Moving Expenses

You receive a request to process a payment to reimburse an RF employee for moving expenses. The request is submitted under your standard invoice documentation. Prior to payment you review the RF Moving Expense Reimbursement Policy and the Payment Tax and Reporting Handbook. To be covered under the IRS rules for moving expense reimbursements the purpose must be an incentive to hire and IRS Time and Distance test must be passed. A separate RF form must be completed to identify the details. All agreed upon payments or reimbursements are non-qualified and require processing within payroll, tax withholding and reporting on the employee W-2.

Example 3- Gift Cards

You receive a request to process a payment for a project staff member and you learn, or the documentation shows that the purpose for the payment is to purchase gift cards for distribution to a group. Gift cards are treated the same as cash. You should talk with those requesting the check to identify any tax or reporting issues. The gift cards are taxable and reporting income and instead must be included in payroll processing (Refer to - Taxation and Reporting for Non-Salary Payments - Procedure). Complete the Non-Salary Payment Determinations form and follow the procedure instructions. If non-resident aliens for tax purposes taxable and reportable under restrictive NRA tax and reporting rules. If non-resident alien, do not hesitate to contact central office for further guidance.

Example 4- Petty Cash

Potentially taxable or reportable items have been distributed through a petty cash account. Go to the monitoring section of the procedure document. Although one of the allowable reasons to use the petty cash account is for new employees adjustments pending receipt of a regular pay check from the central office – no other taxable or reportable payments should process through petty cash. Reportable or taxable non-salary payments must make their way through the payroll process to ensure tax withholding rules are applied and the payments and taxes are accumulated for year-end reporting in the W-2 Wage and Tax Statement.

Example 5 – Housing

You hear in a meeting that the RF plans to pay for an employee housing and there is no business connection. This housing is taxable reportable income to the individual. If as part of the work requirement the individual is performing, they must be "on site" and the housing is paid for or provided, it would not be taxable and reportable income, rather a working condition fringe benefit.

Change History

Date

Summary of Change

March 12, 2018

Revision to "Moving Expense Reimbursements" due to new tax law - effective January 1, 2018.

August 15, 2016

New guidance document.

 

 

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