Taxable Fringe Benefits
The Office of Financial Management, OFM, for the State of Washington, has informed the college that effective January 1, 2000, the Internal Revenue Service (IRS) will start enforcement of their Taxable Fringe Benefit Tax Law. The existing policies of the State of Washington have not been in compliance with IRS regulations for some time, and after extensive negotiations and a one-year delay we must now come into compliance.
What this means to the travelers
When you are reimbursed for a meal, the reimbursement becomes a taxable income subject to payroll deductions. This does not apply to meals associated with overnight travel or when the meal is in connection with a college business meeting. Federal Income, Social Security, and Medicare tax deductions must be taken from employees' pay and remitted to the IRS with a matching employer contribution for Social Security and Medicare taxes.
State of Washington travel regulations allow reimbursement for certain meals under a rule known as the, "Three-Hour Rule." It is this category of reimbursement that is now taxable.