GENERAL INFORMATION

he Internal Revenue Service considers goods or services provided to employees and payments to or on behalf of employees part of an employee's compensation unless specifically excluded by the tax code. The University is required to withhold taxes on any non-cash benefits provided to employees.

Fringe benefits may take many different forms. The IRS regulations give the following examples of benefits which could result in taxable income to the employee:

1. An employer-provided automobile.
   
2. Employer-provided meals and lodging.
   
3. A flight on an employer-provided aircraft.
   
4. An employer-provided free or discounted airline flight.
   
5. An employer-provided vacation.
   
6. An employer-provided discount on property or services.
   
7. An employer-provide membership in a country club or other social club.
   
8. An employer-provided ticket to an entertainment or sporting event.

Payments for benefits made through the University of Oklahoma Foundation are treated the same as payments made by the University since these payments are made on behalf of the University. The Foundation is simply acting as a disbursing agent.

Benefits that may be excluded from compensation are those that are provided to employees in order for them to perform their normal duties. An example of such a benefit is a University vehicle which is provided to an employee to use in conducting University business. However, if the employee uses the vehicle for personal business, that use is considered to be compensation and must be reported to Payroll and Records for inclusion in the employee's gross income for tax purposes.

It is the responsibility of the account sponsor to notify Payroll and Records of any agreements which have been entered into which provide an employee goods, services, meals or lodging so that it can be determined if the value of such benefits is taxable income to the employee. This notification must include:

1. The name and Social Security number of the employee receiving the benefit.
   
2. A copy of the agreement (if applicable).
   
3. A description of the benefit.
   
4. The fair market value of the benefit.

If the benefit is determined to be taxable, additional payroll taxes will be withheld from the employee's paycheck. It is important for the department to notify the employee of this additional tax liability. If the benefit is on-going, the account sponsor must continue to report the value of the benefit to Payroll and Records when it is received by the employee. The value of all non-cash benefits must be reported to Payroll and Records before December 10 of the calendar year in which they were received.



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