De minimis fringe benefit
Under US Internal Revenue Service Code § 132(a)(4), “de minimis fringe” benefits provided by the employer can be excluded from the employee’s gross income. “De minimis fringe” means any property or service the value of which is (after taking into account the frequency with which smaller fringes are provided by the employer to the employer’s employees) so small as to make accounting for it unreasonable or administratively impracticable. As a practical matter, 132(a)(4) is a narrowly defined rule of administrative convenience.
Qualification as a de minimis fringe benefit
For property or services to qualify as “de minimis fringe” benefits, it must be unusual or occasional in frequency; and the value cannot be a disguised form of compensation.
Generally, the Internal Revenue Service (“IRS”) considers the following three factors:
- the frequency of the benefit
- the value of the benefit
- the administrative impracticality.
Examples of de minimis fringe benefits
- occasional employee use of photocopier if the employer sufficiently controls its use and 85% of its use is for business purposes;
- occasional typing of personal letters by a company secretary;
- occasional snacks (e.g. coffee, donuts, candy, etc.);
- occasional tickets for entertainment or sporting events;
- holiday and birthday gifts (not cash) with a low fair market value;
- occasional meal and transportation money when an employee must work overtime;
- group-term life insurance payable on death of an employee’s spouse or dependent if the face value is no greater than $2000;
- flowers, fruits, books, etc. provided under special circumstances (e.g. illness or family crisis); and
- occasional parties or picnics for employees and their guests.
Examples of property or services not de minimis fringe benefits
- cash (other than occasional meal or transportation money for overtime work);
- gift certificates or cash equivalent vouchers;
- employee discounts;
- employee achievement awards;
- season tickets to sporting or theatrical events;
- membership to a private country club or athletic facility; and
- certain transportation costs.
Tax consequences for the employee
If the property or services provided to the employee qualify as a “de minimis fringe” benefit, then the employee is allowed not to report the amount.
- IRC § 132(a)(4)(2007).
- IRC § 132(e)(1); Tres. Reg. § 1.132-6(a).
- IRS , FAQs for Government Entities Regarding De Minimis Fringe Benefits,.
- Internal Revenue Service, About the IRS .
- INTERNAL REVENUE SERVICE, EMPLOYER’S TAX GUIDE TO FRINGE BENEFITS 8, .
- Treas. Reg. § 1.132-6(e)(1)
- Internal Revenue Service, Facts and Questions for Government Entities Regarding De Minimis Fringe Benefits, 
- INTERNAL REVENUE SERVICE, EMPLOYER’S TAX GUIDE TO FRINGE BENEFITS 8 .
- Treas. Reg. § 1.132-6(e)(2)
- IRC § 132(a)(4).