No good deed goes unpunished

One Effect of the Recent Tax Reform on Not-for-Profit Organizations

By Howard J. Kass, CPA, CGMA, AEP®

As often as employers are maligned, there are times where they try to do the right thing for their employees. To be fair, many times, an employer may take an action or incur an expense that benefits its employees, knowing that the employer will benefit by a tax deduction for incurring an expense. In some cases, Congress encourages such behavior by explicitly permitting favorable tax treatment for certain programs.

At the same time the employer received a deduction, these fringe benefits were tax-free to the employee. The result? There was a tax benefit to both the employer and the employee for these fringe benefits.

What was the public-policy reason for allowing this fringe benefit? To make it more affordable for employers to attract employees to work in locations where there was no available free parking.

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