Employer / Employee Federal Tax Obligation Question

asphaltgambler · 08-31-2018, 04:29 AM

A very unusual situation is about to hit a group of us; as in prying our wallets open to pay a debt ( for I assume) improper accounting regarding a benefit that is provided by our employer.

Short Story: I work for a large county government here in Virginia - in one of the divisions in that county. Of the many benefits that are provided, we receive 11 changes of uniforms free (to us).

In a recent meeting where only upper management attended, there has been some 'details' shared. Apparently the past administration has made some mistake with how their computation is done regarding the uniform benefit as far as the IRS is concerned. As in: a significant shortage.

There is a meeting next week with the rest of us so share "How this will impact" us. Hmmmmmmmmmmmmmmmmmmm.

They are calling this "New Policy" ............................................Hmmmmm mmm.

We are being warned through the email and managers that we are only to ask questions in advance via email, not in the meeting itself. Since there has been no official statement on exactly what the policy is or the impact to us, there can be a million questions.

It looks like all uniformed personnel will be footing bill for this. Unbelievable. I will tell you there is almost a riot currently going on, anarchy just under the surface for most.

ALSO - this event / impact is supposed to be a 1 time deal, just this year........

IF the origin of the issue is really true - I do not believe it is lawful and our responsibility to financially bear the burden of this benefit provided to us. How can an employer force an employee to pay taxes (back or otherwise) on a benefit that you provide them?

Further - I don't think they can deduct this from our pay unless we approve it in advance with our signature. By them stating it is policy - that may be a way around it for them.

We don't know what the amount is but believe it could be significant.............

plexiform · plexiform's Garage

Sounds like in the past they probably just gave the employees the uniforms without adding that to your taxable income. Maybe they need to start adding it to your taxable income. If they expect all employees to pay back paxes on the uniform costs, that would seem unfair. If this is the issue, then the company should just pay the back tax and let the employees know that starting from now on, the cost of uniforms is going to be added to your final income of the year to be a taxed amount. I can't imagine this total amount is going to be so high that it would make a big difference for the company. But then again I don't know what the cost of providing uniforms is and not sure how big the company is. Nothing else obvious comes to mind unless you have more information.

asphaltgambler · 08-31-2018, 04:43 AM

As of today, no. The way it's being handled hits all the wrong buttons. I do know an associate sent off 11 questions Tuesday, he's still waiting.

I don't see how this can we can be held responsible.

pete3799 · pete3799's Garage

Get a copy of the county's budget.
There should be a line item for uniforms.....at least there is on our town budget.
Don't see how you would be liable for any charges at all.

berettafan · 08-31-2018, 06:12 AM

IRS publication 5138 on p12/13 indicates uniforms provided to public employees are NOT taxable as wages so long as certain requirements are met.

An excerpt:
Clothing Provided by the Employer
The value of work clothing provided by the employer is not taxable to the employee if:
 The employee must wear the clothing as a condition of employment; and
 The clothes are not suitable for everyday wear.
It is not enough that the employee wear distinctive clothing; the employer must specifically require the clothing as a working condition. Nor is the test met because the employee does not, in fact, wear the work clothes away from work. The clothing must not be suitable for taking the place of regular clothing However, a detective's suit jacket and related clothing, since they are suitable for everyday wear, do not qualify as a uniform and are taxable to the employee.

Noah930 · Noah930's Garage

Wouldn't the mandated uniforms be tax deductible for you, anyway? So the municipality gave you guys uniforms. Are you going to be wearing them around town when you're not working? Gifting you $1500 of mandatory uniforms is different than gifting you $1500 of clothing, no?

It's a bit hard for you to respond, if you don't know what upper mgmt is planning (plotting?). But obviously, in the end you guys will have e to consult a CPA to unravel this mess.

1990C4S · 08:13 AM

Are you unionized?

asphaltgambler · 08-31-2018, 08:13 AM

No - according to the IRS publication 5138 on p12/13 above we absolutely meet all the requirements. So then how can they then make us pay for the accounting mistake in the past?

asphaltgambler · 08-31-2018, 08:22 AM

There is a union here but only a fraction of employees are members

ckelly78z · 08-31-2018, 08:30 AM

A computation mistake by the past administration is still a mistake by your employer, which should then be corrected by your current employer. If it comes to fruition that the workers have to foot the bill for past mistakes not of their doing, then a tax lawyer would be very interested in this case as a class action.

I can't imagine this would actually happen, but stranger things have occured.

asphaltgambler · 08-31-2018, 09:16 AM

Well it looks as it will happen, the meeting is set for the 4th.

berettafan · 08-31-2018, 09:26 AM

Quote:

Originally Posted by asphaltgambler

No - according to the IRS publication 5138 on p12/13 above we absolutely meet all the requirements. So then how can they then make us pay for the accounting mistake in the past?

If you meet the requirements then I’m not clear what the mistake is unless IRS didn’t understand. Need clarification from you employer.

berettafan · 08-31-2018, 09:54 AM

are the uniforms given to you directly or do they add money to your pay to buy them yourself?

asphaltgambler · 08-31-2018, 11:38 AM

Given to us - all controlled by the employer, the county.

Tobra · 08-31-2018, 12:12 PM

Something is rotten in Denmark

Tidybuoy · 08-31-2018, 12:53 PM

The only thing that I can add to this:

We require our employees to wear uniforms and we supply them at no cost to the employee.

We also require employees to wear safety shoes in the plant. For the shoes, we allow the employee to brows thru a catalog and they can get anything they want but the company will only pay $60. Therefore, if an employee selects a $120 shoe, they have to pay the difference.

We do not report any of this as W-2 wages or reimbursements.

asphaltgambler · 08-31-2018, 01:41 PM

Same here - we also receive $125 shoe allowance twice a year....

asphaltgambler · 09-05-2018, 04:15 AM

Update: The meeting was postponed to the 11th. We'll see what the agenda is then....

Por_sha911 · Por_sha911's Garage

Have you submitted a question quoting the above tax code?

I think they delayed the announcement because an attorney somewhere in the company said "um, wait..."

legion · 09-05-2018, 09:25 AM

Quote:

Originally Posted by Por_sha911

Have you submitted a question quoting the above tax code?

I think they delayed the announcement because an attorney somewhere in the company said "um, wait..."

That would be my guess as well. Someone had the bright idea to "fix" the problem on the back of employees. An attorney caught wind of it and it's suddenly delayed.

I'd be surprised if an attorney can iron this out in a week....