Financial Services Manual (FIN)

Effective: 7/1/1996

Revised: 9/12/2011

FIN 123: Taxability of Employee Discounts

Purpose

To provide policy relating to the taxability of employee documents

Sources

Internal Revenue Service regulations

University policy

Applicability

Discounts provided to the employees of Arizona State University by ASU and other financially related organizations

Policy

ASU and other financially related organization may offer employee discounts. If employee discounts exceed 20 percent of the price of the services offered to the general public, the discount is generally a taxable benefit to the employee.

Discounts up to 20 percent are generally not a taxable benefit. Additionally, discounts greater than 20 percent are not taxable if admittance or participation in the event does not make the organization incur any additional costs (including foregone revenues). Accordingly, discounts greater than 20 percent can be made only on an “as available” basis and cannot preempt a patron willing to pay full price.

Exception

This policy does not apply to employee benefits administered by Human Resources.

Procedure

If a taxable benefit is provided to an ASU employee, send a memo to to Financial Services-Payroll Services requesting that the value of the discount be considered additional compensation to the employee(s) involved. Any questions regarding the application of IRS regulations governing ASU employee discounts should be directed to the ASU tax compliance liaison of Financial Services at 480/965–8479.

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