|Section 1000 Policies|
Policy Number: 1203.00
Policy Title: Fringe Benefits Management
Policy Effective Date: July, 1, 2012
Last Revision Date: July, 1, 2012
(see revision history)
To provide guidance, clarification, examples and best practices for taxable fringe benefits regarding intercollegiate athletics administration.
This policy pertains to fringe benefits derived from athletics programs. Fringe benefits subject to taxation are defined as goods or services that an employee receives by virtue of their employment relationship with the CSU in lieu of or in addition to regular taxable wages. Fringe benefits are part of an employee’s wages unless specifically exempted under the Internal Revenue Code. Sources of such income shall include, but are not limited to, the following:
- University issued automobiles (i.e. courtesy cars);
- Complimentary and discounted tickets;
- Branded clothing and merchandise;
- Services provided to individuals not related to their primary employment activity (e.g. massage therapists, yoga classes, photography services);
- Income sourced from annuities, sports camps, housing benefits, country club memberships, television and radio programs;
- Endorsement or consultation contracts with any outside third-party vendor, manufacturer, or individual, such as athletic shoe, apparel, or equipment manufacturers.
Athletic department employees shall be in compliance with the CSU Conflict of Interest Handbook, and Section 11.2.2 of the NCAA Bylaws, which requires all full-time or part-time athletics department coaching and staff members (excluding administrative assistants or clerical personnel) to provide the Chancellor or campus President a written detailed account of all athletically related income and benefits from sources outside the institution.
Such income shall be taxable to the employee even if he is not the direct recipient of the benefit. This is applicable when fringe benefits are received by an employee’s spouse or child.
The campuses will prepare procedures to ensure that information concerning fringe benefits is properly captured and that tax on such benefits is appropriately computed. Such procedures should include three elements: (1) methods by which fringe benefits are identified and reported, (2) steps for determining the statutory or regulatory provision allowing exclusion of all or a portion of the fringe benefit from the employee’s gross income, and (3) techniques for valuing the portion of benefit that is not excludable and therefore subject to both income and employment tax. Reporting of taxable fringe benefits will conform to the provisions contained in Section N of the SCO Payroll Procedures Manual, IRS substantial authority, and NCAA and athletic conference rules and regulations.
Benjamin F. Quillian
Executive Vice-Chancellor/Chief Financial Officer
Approved: April 26, 2012
APPLICABILITY AND AREAS OF RESPONSIBILITY
Questions may be directed to Hui Won, Systemwide Tax and Legislation Coordinator at the Chancellorís Office
RESOURCES AND REFERENCE MATERIALS
Steps to Identify Athletics Related Taxable Fringe Benefits
- Review employment contracts of Athletics Department staff to identify fringe benefits.
- Reconcile working condition fringe benefits identified in staff employment contracts with sponsorship & marketing contracts signed by the President or Athletics Director to ensure all fringe benefits are recognized. Sponsorship and marketing contracts can usually be provided by either the campus purchasing or legal department.
- Analyze fringe benefits to determine the statutory or regulatory provision allowing exclusion of all or a portion of the fringe benefit from the employee’s gross income. Sources of regulatory provisions may be found in IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits.
Sound Business Practices:
- Campuses should consider designating an appropriate official on campus to be responsible for athletics-related taxable fringe benefits. The designee should maintain communications and interactions with the campus tax coordinator, travel manager, HR, Payroll, Financial Services, and Purchasing.
- Regular reviews should be conducted to identify taxable fringe benefits. Examples of documents that could reveal these benefits include: the required NCAA periodic filings with the Chancellor or campus President; employment contracts with athletic coaches and administrators; sponsorship and marketing contracts signed by the campus President or Athletic Administration; minutes of finance, budget or executive committee meetings; faculty handbooks and newsletters; campus newspapers; athletic event programs and media guides.
- To ensure compliance with tax reporting responsibilities, an annual review should be conducted of SCO Form 676V/P filings by the campus Payroll office for athletics administration, coaches and personnel.
- Campuses should develop tools to facilitate the compilation of data necessary for documenting and reporting taxable fringe benefits. Some examples include the following: business mileage tracking logs/forms to determine personal use of university-provided resources, such as courtesy cars, and forms to document complimentary tickets and related expenses.
Laws, State Codes, Regulations and Mandates:
- SCO Payroll Procedures Manual, Section N
- A Guide to Federal Tax Issues for Colleges and Universities (published by NACUBO) Chapter 1300
- IRS Publication 15-B
- Internal Revenue Code (various sections including Code §§ 61 and 132) and related Regulations
- SAM Section 8572.1–.4 Income Tax Withholding
- SAM Section 8422.19 Reportable Payments to Individuals
- SAM Sections 8572, 8572.1–.2, 8572.5 Employment Tax Withholding
COGNIZANT OFFICE(S)CO Manager:
Mr. Hui Won
Systemwide Tax and Legislation Coordinator
CSU Office of the Chancellor
Mr. Greg Sweet, CRTP
University Tax Compliance Manager, Financial Services
Financial Officers Association