Fringe benefits are an essential tool for employers. They comprise a significant portion of an employee’s total compensation package and are instrumental for attracting and retaining valuable employees. Given their importance, it is necessary for both employers and employees to understand the related tax implications. Most fringe benefits are considered taxable compensation by the IRS and must be included in the employee’s taxable wages, unless it is specifically excluded; however, nowhere in the Internal Revenue Code or accompanying regulations is the term fringe benefit concisely defined.
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