De minimis fringe benefit

De minimis fringe benefits are low-value perks provided by an employer; de minimis is legal Latin for "minimal".

Perks that are determined to be de minimis fringe benefits may not be accounted or taxed in some jurisdictions as having too small value and too complicated an accounting.

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.

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> considers the following three factors:

De minimis fringe is defined in Internal Revenue Code section 132(e)(1) as any property or service given to an employee by the employer which is, after taking into account the frequency provided, whose value is so small as to make accounting for it unreasonable or administratively impracticable. Examples of de minimus fringe includes personal use of an employer-provided cell phone provided primarily for business purposes; occasional personal use of the employer's copier; holiday gifts, other than cash or gift cards, with a low fair-market value; occasional parties or picnics for employees and their guests; occasional tickets for theater or sporting events.

Under Section 1.132-6(b)(1) of the Treasury Regulations, all similar fringes must be considered together to determine whether they are de minimis. One free meal given to all employees once a year would qualify because the meals are infrequently provided. One free meal provided to a different employee each week throughout the year would not qualify.

Under Section 1.132-6(c) of the Treasury Regulations, cash never qualifies as a de minimis fringe. Cash or gift certificates provided to an employee so the employee may buy a theater ticket does not qualify. It would qualify, however, if the employer purchases the theater ticket, provides the actual theater ticket to the employee, and the employer infrequently gives out tickets to employees.

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