I.R.S. Rules Provide Guidance on Fringe-Benefit Tax Standard

March 15, 1989 1 min read

Washington--Proposed guidelines for school districts and other employers to use in determining whether their fringe benefits discriminate between high- and low-paid employees, as outlined by Section 89 of the 1986 tax-reform law, were released by the Internal Revenue Service last week.

In the March 7 Federal Register, the i.r.s. explains how employers can test benefit plans to determine if the disparity between groups of employees warrants discriminatory status. If the plans are found to be unequally distributed among pay groups, the employer may incur a penalty and the higher-paid employees may owe taxes on the benefits.

Katharine Herber, legislative counsel for the National Association of School Boards, said the group was urging state affiliates to obtain copies of the proposal. She said school dis8tricts must also carefully consider the impact state laws may have on Section 89 before testing their plans.

Copies of the proposed rule, “Benefits Provided Under Certain Employee Benefit Plans,” are available for $1.50 each from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. The volume and page numbers (54 FR 9460) must be cited in the request.--nm

A version of this article appeared in the March 15, 1989 edition of Education Week as I.R.S. Rules Provide Guidance on Fringe-Benefit Tax Standard