§ 132.
Certain fringe benefits
(a)
Exclusion from gross income
Gross income shall not include any fringe benefit which qualifies as a—
(1)
no-additional-cost service,
(2)
qualified employee discount,
(3)
working condition fringe,
(5)
qualified transportation fringe,
(6)
qualified moving expense reimbursement,
(7)
qualified retirement planning services, or
(8)
qualified military base realignment and closure fringe.
(b)
No-additional-cost service defined
For purposes of this section, the term “no-additional-cost service” means any service provided by an employer to an employee for use by such employee if—
(1)
such service is offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing services, and
(2)
the employer incurs no substantial additional cost (including forgone revenue) in providing such service to the employee (determined without regard to any amount paid by the employee for such service).
(c)
Qualified employee discount defined
For purposes of this section—
(1)
Qualified employee discount
The term “qualified employee discount” means any employee discount with respect to qualified property or services to the extent such discount does not exceed—
(A)
in the case of property, the gross profit percentage of the price at which the property is being offered by the employer to customers, or
(B)
in the case of services, 20 percent of the price at which the services are being offered by the employer to customers.
(2)
Gross profit percentage
(A)
In general
The term “gross profit percentage” means the percent which—
(i)
the excess of the aggregate sales price of property sold by the employer to customers over the aggregate cost of such property to the employer, is of
(ii)
the aggregate sale price of such property.
(B)
Determination of gross profit percentage
Gross profit percentage shall be determined on the basis of—
(i)
all property offered to customers in the ordinary course of the line of business of the employer in which the employee is performing services (or a reasonable classification of property selected by the employer), and
(ii)
the employer’s experience during a representative period.
(3)
Employee discount defined
The term “employee discount” means the amount by which—
(A)
the price at which the property or services are provided by the employer to an employee for use by such employee, is less than
(B)
the price at which such property or services are being offered by the employer to customers.
(4)
Qualified property or services
(d)
Working condition fringe defined
(e)
De minimis fringe defined
For purposes of this section—
(2)
Treatment of certain eating facilities
The operation by an employer of any eating facility for employees shall be treated as a de minimis fringe if—
(A)
such facility is located on or near the business premises of the employer, and
(B)
revenue derived from such facility normally equals or exceeds the direct operating costs of such facility.
The preceding sentence shall apply with respect to any highly compensated employee only if access to the facility is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees. For purposes of subparagraph (B), an employee entitled under section 119 to exclude the value of a meal provided at such facility shall be treated as having paid an amount for such meal equal to the direct operating costs of the facility attributable to such meal.
(f)
Qualified transportation fringe
(1)
In general
For purposes of this section, the term “qualified transportation fringe” means any of the following provided by an employer to an employee:
(A)
Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and place of employment.
(D)
Any qualified bicycle commuting reimbursement.
(2)
Limitation on exclusion
The amount of the fringe benefits which are provided by an employer to any employee and which may be excluded from gross income under subsection (a)(5) shall not exceed—
(A)
$175 per month in the case of the aggregate of the benefits described in subparagraphs (A) and (B) of paragraph (1),
(B)
$175 per month in the case of qualified parking, and
(C)
the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.
(4)
No constructive receipt
(5)
Definitions
For purposes of this subsection—
(A)
Transit pass
The term “transit pass” means any pass, token, farecard, voucher, or similar item entitling a person to transportation (or transportation at a reduced price) if such transportation is—
(i)
on mass transit facilities (whether or not publicly owned), or
(ii)
provided by any person in the business of transporting persons for compensation or hire if such transportation is provided in a vehicle meeting the requirements of subparagraph (B)(i).
(B)
Commuter highway vehicle
The term “commuter highway vehicle” means any highway vehicle—
(i)
the seating capacity of which is at least 6 adults (not including the driver), and
(ii)
at least 80 percent of the mileage use of which can reasonably be expected to be—
(I)
for purposes of transporting employees in connection with travel between their residences and their place of employment, and
(II)
on trips during which the number of employees transported for such purposes is at least ½ of the adult seating capacity of such vehicle (not including the driver).
(D)
Transportation provided by employer
(F)
Definitions related to bicycle commuting reimbursement
(i)
Qualified bicycle commuting reimbursement
(ii)
Applicable annual limitation
(iii)
Qualified bicycle commuting month
The term “qualified bicycle commuting month” means, with respect to any employee, any month during which such employee—
(I)
regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and
(II)
does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).
(6)
Inflation adjustment
(A)
In general
In the case of any taxable year beginning in a calendar year after 1999, the dollar amounts contained in subparagraphs (A) and (B) of paragraph (2) shall be increased by an amount equal to—
(i)
such dollar amount, multiplied by
(ii)
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting “calendar year 1998” for “calendar year 2016” in subparagraph (A)(ii) thereof.
(7)
Coordination with other provisions
(8)
Suspension of qualified bicycle commuting reimbursement exclusion
(g)
Qualified moving expense reimbursement
For purposes of this section—
(2)
Suspension for taxable years 2018 through 2025
(h)
Certain individuals treated as employees for purposes of subsections (a)(1) and (2)
For purposes of paragraphs (1) and (2) of subsection (a)—
(1)
Retired and disabled employees and surviving spouse of employee treated as employee
With respect to a line of business of an employer, the term “employee” includes—
(A)
any individual who was formerly employed by such employer in such line of business and who separated from service with such employer in such line of business by reason of retirement or disability, and
(B)
any widow or widower of any individual who died while employed by such employer in such line of business or while an employee within the meaning of subparagraph (A).
(2)
Spouse and dependent children
(B)
Dependent child
For purposes of subparagraph (A), the term “dependent child” means any child (as defined in section 152(f)(1)) of the employee—
(i)
who is a dependent of the employee, or
(ii)
both of whose parents are deceased and who has not attained age 25.
For purposes of the preceding sentence, any child to whom section 152(e) applies shall be treated as the dependent of both parents.
(3)
Special rule for parents in the case of air transportation
(i)
Reciprocal agreements
For purposes of paragraph (1) of subsection (a), any service provided by an employer to an employee of another employer shall be treated as provided by the employer of such employee if—
(1)
such service is provided pursuant to a written agreement between such employers, and
(2)
neither of such employers incurs any substantial additional costs (including foregone revenue) in providing such service or pursuant to such agreement.
(j)
Special rules
(1)
Exclusions under subsection (a)(1) and (2) apply to highly compensated employees only if no discrimination
(2)
Special rule for leased sections of department stores
(A)
In general
For purposes of paragraph (2) of subsection (a), in the case of a leased section of a department store—
(i)
such section shall be treated as part of the line of business of the person operating the department store, and
(ii)
employees in the leased section shall be treated as employees of the person operating the department store.
(B)
Leased section of department store
(3)
Auto salesmen
(B)
Qualified automobile demonstration use
For purposes of subparagraph (A), the term “qualified automobile demonstration use” means any use of an automobile by a full-time automobile salesman in the sales area in which the automobile dealer’s sales office is located if—
(i)
such use is provided primarily to facilitate the salesman’s performance of services for the employer, and
(ii)
there are substantial restrictions on the personal use of such automobile by such salesman.
(4)
On-premises gyms and other athletic facilities
(B)
On-premises athletic facility
For purposes of this paragraph, the term “on-premises athletic facility” means any gym or other athletic facility—
(i)
which is located on the premises of the employer,
(ii)
which is operated by the employer, and
(iii)
substantially all the use of which is by employees of the employer, their spouses, and their dependent children (within the meaning of subsection (h)).
(5)
Special rule for affiliates of airlines
(A)
In general
If—
(i)
a qualified affiliate is a member of an affiliated group another member of which operates an airline, and
(ii)
employees of the qualified affiliate who are directly engaged in providing airline-related services are entitled to no-additional-cost service with respect to air transportation provided by such other member,
then, for purposes of applying paragraph (1) of subsection (a) to such no-additional-cost service provided to such employees, such qualified affiliate shall be treated as engaged in the same line of business as such other member.
(C)
Airline-related services
For purposes of this paragraph, the term “airline-related services” means any of the following services provided in connection with air transportation:
(iii)
Ticketing and reservations.
(iv)
Flight planning and weather analysis.
(v)
Restaurants and gift shops located at an airport.
(vi)
Such other similar services provided to the airline as the Secretary may prescribe.
(6)
Highly compensated employee
(8)
Application of section to otherwise taxable educational or training benefits
(k)
Customers not to include employees
(l)
Section not to apply to fringe benefits expressly provided for elsewhere
(m)
Qualified retirement planning services
(2)
Nondiscrimination rule
(3)
Qualified employer plan
(n)
Qualified military base realignment and closure fringe
For purposes of this section—
(Added [Pub. L. 98–369, div. A, title V, § 531(a)(1)], July 18, 1984, [98 Stat. 877]; amended [Pub. L. 99–272, title XIII, § 13207(a)(1)], (b)(1), Apr. 7, 1986, [100 Stat. 319]; [Pub. L. 99–514, title XI], §§ 1114(b)(5), 1151(e)(2)(A), (g)(5), title XVIII, §§ 1853(a), 1899A(5), Oct. 22, 1986, [100 Stat. 2451], 2506, 2507, 2870, 2958; [Pub. L. 100–647, title I, § 1011B(a)(31)(B)], title VI, § 6066(a), Nov. 10, 1988, [102 Stat. 3488], 3702; [Pub. L. 101–140, title II, § 203(a)(1)], (2), Nov. 8, 1989, [103 Stat. 830]; [Pub. L. 101–239, title VII], §§ 7101(b), 7841(d)(7), (19), Dec. 19, 1989, [103 Stat. 2304]