Monday, October 31, 2011


IRS pulls ruling that OK'd employer-provided clothing as exempt de minimis fringe

As I am sure you are aware, work clothes are not deductible unless it is a uniform. Furthermore, clothes that are suitable for wear on the street are not deductible. Therefore, for example, even though you are required to wear black at work, since the clothes are acceptable in public they are not deductible.

Earlier this year, I thought maybe the IRS was going to give us a break. They ruled that a city could provide one set of clothes for their street workers. Their rational was that this was a "de minimus" fringe. What that means in general is that the cost was minimal and therefore the cost to track would not be worth the effort. An example of de minimus would be coffee and rolls that you provide for staff.

I thought that if this works for city why it wouldn’t work for salons and spas.

Bad news- the IRS changed their mind.

Without much by way of explanation, IRS has revoked the earlier ruling which allowed employees to exclude the value of employer-provided clothing and related accessories from their taxable income as a de minimis fringe benefit.

So if you heard from me or others that you might have a new deduction the IRS has pulled it back.