Additional board member Compensation allowances

Is reimbursing members for their mileage to board and/or committee meetings taxable if held on-site?

The answer is that commuting is defined as travel between home and work and is considered an employee’s personal expense. And therefore If the government entity reimburses a board member for commuting, that reimbursement is taxable to the board member and subject to employment taxes.  What if the government employee takes someone with them on a business trip?  What, if any, tax impact would that have?

 

What is not a taxable Fringe Benefit?

Any money paid or incurred with respect to a spouse, dependent, or other individual accompanying an employee on business travel is considered a taxable fringe benefit.  However, there are some exceptions.

 

What is not a Taxable Fringe Benefit?

It is not a taxable fringe benefit if:

  • The accompanying individual is an employee of the employer,
  • The travel of the accompanying individual is for a valid business purpose, or
  • The travel expenses otherwise would be deductible by the accompanying individual

The term other individual does not include a business associate with valid travel expenses that otherwise would be a valid business expense.

The expenses must also meet the normal rules for travel expenses.  That means that there must be a real business purpose for the individual’s presence.  Based on court decisions, the presence of the spouse or other traveling companion on a trip must be necessary, not merely helpful, to establish the requisite business purpose.

You can find more travel reimbursement information on the FSLG website at www.irs.gov/government-entities