607.10 OVERVIEW

The Seattle College District will adhere to the Office of Financial Management (OFM) and Internal Revenue Service (IRS) rules and regulations regarding taxable fringe benefits.

In general, fringe benefits are taxable unless specifically excluded by a section of the IRS code. For employees, this means that taxable amounts are subject to federal income tax withholding, social security, and Medicare deductions and are included on the W-2 as wages. For non-employees, the amounts are 1099 reportable.

As a general rule, fringe benefits reimbursed under an "accountable" plan are not taxable to employees and others. The IRS requirements of an "accountable" plan are that there is a business connection to the expenditure, adequate accounting by the recipient within a reasonable period of time, and excess reimbursements or advances must be returned within a reasonable period of time. All three requirements must be met for a plan to be deemed accountable.

607.20 DEPARTMENT RESPONSIBILITIES

  • 607.20.01 Campus Department Personnel

    Campus Department Personnel should familiarize themselves with taxable fringe benefits issues and procedures and should act as the first level of review. Campus department personnel will be responsible for submitting the appropriate documentation as outlined below for payments which are determined to be taxable fringe benefits. Campus department personnel are responsible for notifying employees when a payment meets the taxable fringe benefit criteria.

  • 607.20.02 Business Offices

    The Campus Business Office will be responsible for reviewing and approving documentation concerning taxable fringe benefits issues. If a payment is determined to be a taxable fringe benefit, the campus business office will be responsible for notifying and providing a copy of the appropriate documentation to the department of the affected employee. The campus business offices will each be responsible for housing a copy of the OFM and IRS rules and regulations regarding taxable fringe benefits.

    The Campus Business Offices will send all taxable fringe benefit expense documents to the payroll office for processing. However, if a travel expense voucher has both taxable and non-taxable amounts, it will be the Campus Business Office's responsibility to send the original travel expense voucher to the district accounting office for payment of the non-taxable amounts. In addition, the Campus Business Office will send a copy (marked "Payroll Original") of the travel expense voucher to the district payroll office for payment of the taxable fringe benefits amount.

  • 607.20.03 Payroll

    Payroll will process all taxable fringe benefit payments. Appropriate deductions (federal income tax withholding, social security, and Medicare) will be deducted from payments using the payroll system. Payment requests will be processed by Payroll according to the payroll schedule. Payment requests received before the payroll cutoff date will be disbursed in the employee's next regularly scheduled paycheck. Payment requests received after the payroll deadline will be made on the next available pay cycle.

607.30 REPORTING AND MONITORING

Taxable fringe benefit payments will be reported on the monthly salary and wage reports, which are distributed to department personnel. The payments will be coded using the OFM chart of accounts sub-object code that is appropriate for the type of payment that was issued (i.e., Awards to be used for Employee Professional Development and Training will be coded as "EG," in-state meals for employees not in travel status will be coded as "GA," etc.).

Taxable fringe benefit payments will be identified by a separate code on the employee's pay stub.

607.40 PROCESS

  • 607.40.01 Travel/Meals*

    If a travel expense or a meal expense is determined to be a taxable fringe benefit (per OFM and IRS regulations), it should be processed on a travel expense voucher, which contains a separate column for taxable fringe benefits. The amounts in the taxable fringe benefits column will be reported to payroll and paid through the payroll system.

    If a travel expense voucher has both taxable and non-taxable amounts, the original travel expense voucher will be sent to the district accounting office for payment of the non-taxable amounts. In addition, a copy of the travel expense voucher will be marked "Payroll Original" by the campus business officer and sent to the district payroll office for payment of the taxable fringe benefits amount.

    If all of the payments on a travel expense voucher are taxable fringe benefits, the travel expense voucher will be sent to payroll only.

    *The State Administrative and Accounting Manual (SAAM) 10.40.60 allows non-taxable reimbursement for meals with meetings when they are pre-approved, the purpose of the meeting is documented (agenda is attached), the meal is an integral part of the meeting, and official state business is conducted during the meal period. Meals for coaches while not in travel status are specifically excluded and are a taxable fringe benefit to the employee.

  • 607.40.02 Awards**

    Cash or cash equivalent awards will be processed on ENSRC's through payroll and all applicable payroll taxes will be deducted.

    **Before accepting a cash award, employees may choose to give their awards to their department budget for allowable expenses incurred by the department (equipment, supplies, travel, etc.). If the employee chooses to donate the award back to the college in this manner, no taxes will be assessed to the employee.

607.50 Other

All other payments to employees, which are determined to be taxable fringe benefits, are to be processed on an invoice voucher through payroll where all applicable payroll taxes will be deducted from the payment. Examples of payments which are to be submitted on invoice vouchers include dues to social clubs which do not qualify as non-taxable per IRS and OFM, reimbursement for meals while not in travel status and where no business agenda is provided, graduate level classes, Transportation Management Plan Bonus Vouchers, etc.

Companion Document : Pol607
Adoption Date : 0001/01/01
Revision Date : 2014/02/24