Democratic fundraiser

[dutchboy]

At a meeting at work yesterday it was explained to us the effective Jan 1 this year any gift with a value of 10.00 or more is now considered taxable income.

The value of the gift will be increased 60% for tax purposes. Fed, State, Fica, etc will then be deducted.

Each month at our staff meeting we would have a drawing for a 10.00 gift certificate. Now in addition to the 10.00 gift we will see 16.00 reported as income on our paychecks.

Hussein Obama did run on the promise of change. Guess this CHANGE in IRS rules was one of the things he was referring to.

[NJ Stinks]

Gifts have been taxable for years (long before Obama became president) if you could easily set a value on the gift. I don't understand how a taxable gift can be increased 60% in value for tax purposes though. I could not find a change in the law that supports a 60% increase in value. (Maybe it's because the gift is subject to employment taxes so somebody at your company suggested a 60% increase in value? :confused: ) At any rate, the link below is from 2006 and discusses gifts to employees:

http://www.nysscpa.org/cpajournal/2006/406/essentials/p50.htm

Here's a highlight of the law as ruled by the IRS in 2004 in Technical Advice Memorandum (halfway down the web page of the article):
__________________________________________________

In TAM 200437030, the IRS noted that Treasury Regulations section 1.132-6(c) provides that, except for special rules that apply to occasional meal money, the provision of any cash fringe benefit is never excludible as a de minimis fringe benefit. For example, providing cash to an employee for a theater ticket that would itself be excludible as a de minimis fringe is not excludable as a de minimis fringe.

In the legislative history of the Deficit Reduction Act of 1984 (DEFRA 1984), pursuant to which IRC section 132 was enacted, Congress provided illustrations of benefits that are excludible as de minimis fringe benefits, such as “traditional gifts on holidays of tangible personal property having a low fair market value (e.g., a turkey given for the year-end holidays).” [See Staff of the Joint Committee on Taxation, 98th Cong., 2d Sess., General Explanation of the Revenue Provisions of the Deficit Reduction Act of 1984, 858–59 (1984), hereinafter JCS-41-84.]

According to IRC section 132(e)(1), applying the statutory definition of a de minimis fringe benefit requires addressing three factors: value, frequency, and administrative impracticability. Because cash and cash-equivalent fringe benefits such as gift certificates have a readily ascertainable value, they do not constitute de minimis fringe benefits, because these items are not unreasonable or impracticable to account for by the employer.
_______________________________________

We can blame Obama for a lot of things but I doubt this is one of them.