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