Companies that require their workers to wear employer-provided clothing on the clock will want to check out this recent ruling from the Internal Revenue Service.
Employers may be able to exclude clothing from employees’ wages and treat it as a de minimis fringe benefit — as long as it meets one condition:
If keeping track of the clothing is so tedious that accounting for it is more costly than the clothing itself, it’s considered a de minimis benefit.
IRS ruling
Example: One company provided employees with a variety of items — hats, polo, shirts — which they were required to wear on the job.
Problem was, the company purchased the clothing under a complicated master contract that adjusted prices by purchase levels.
That meant keeping track of every article of clothing. And the company said the accounting involved was just too complicated.
And the IRS agreed in a recent private letter ruling. So the clothing purchases were de minimus benefits that could be excluded from employee wages.
