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In the Payroll Mailbag …

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What counts as a uniform?

Question: We’re an electric utility cooperative. Per OSHA guidelines, employees must wear clothing that’s highly fire retardant. So far, employees have been wearing their own jackets, overalls, etc.; but since these items are expensive, the company is thinking of purchasing them for employees. Before we take the plunge, we need to know whether these items qualify as uniforms. Management says yes, because they’re specialty items. Payroll is not so sure because the clothing looks exactly like street clothing.

Answer: Unfortunately, there’s no cut-and-dried answer to this question. Uniforms may be provided tax free to employees if they’re required by the job (clearly this is the case) and they’re not easily adaptable to street clothes. So the issue isn’t what the clothing looks like, it’s whether the garments can substitute for everyday street clothing.

In your case, garments that are highly flame-retardant may look like other garments, but may not be easily adaptable to street wear, especially if they’re heavy and hot. If the garments can substitute for street wear, you may not provide them tax free. As you evaluate this issue, it would be wise to take an expansive view of the concept of street clothing, because the IRS certainly does.

Is bike sharing a legitimate pretax commuter benefit?

Question: Our company is located in New York City, which has a fee-supported bike-sharing program. Employees who commute via mass transit can have pretax deductions made from their pay for their commuting costs. A couple of employees who bicycle to work have asked whether they can pay these fees on a pretax basis. Can they?

Answer: No. Under tax code Section 132(f), you may reimburse employees for their bicycle commuting, but you can’t do this on a pretax basis, and reimbursements are limited to reasonable expenses related to the purchase of a bicycle and to bicycle improvements, repair and storage.

Monthly fees to participate in a bike sharing program aren’t listed among the reimbursable expenses.

In addition, employees must substantiate their expenses before you reimburse them.

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