[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.132-6]

[Page 592-595]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.132-6  De minimis fringes.

    (a) In general. Gross income does not include the value of a de 
minimis fringe provided to an employee. The term ``de minimis fringe'' 
means any property or service the value of which is (after taking into 
account the frequency with which similar fringes are provided by the 
employer to the employer's employees) so small as to make accounting for 
it unreasonable or administratively impracticable.
    (b) Frequency--(1) Employee-measured frequency. Generally, the 
frequency with which similar fringes are provided by the employer to the 
employer's employees is determined by reference to the frequency with 
which the employer provides the fringes to each individual employee. For 
example, if an employer provides a free meal in kind to one employee on 
a daily basis, but not to any other employee, the value of the meals is 
not de minimis with respect to that one employee even though with 
respect

[[Page 593]]

to the employer's entire workforce the meals are provided 
``infrequently.''
    (2) Employer-measured frequency. Notwithstanding the rule of 
paragraph (b)(1) of this section, except for purposes of applying the 
special rules of paragraph (d)(2) of this section, where it would be 
administratively difficult to determine frequency with respect to 
individual employees, the frequency with which similar fringes are 
provided by the employer to the employer's employees is determined by 
reference to the frequency with which the employer provides the fringes 
to the workforce as a whole. Therefore, under this rule, the frequency 
with which any individual employee receives such a fringe benefit is not 
relevant and in some circumstances, the de minimis fringe exclusion may 
apply with respect to a benefit even though a particular employee 
receives the benefit frequently. For example, if an employer exercises 
sufficient control and imposes significant restrictions on the personal 
use of a company copying machine so that at least 85 percent of the use 
of the machine is for business purposes, any personal use of the copying 
machine by particular employees is considered to be a de minimis fringe.
    (c) Administrability. Unless excluded by a provision of chapter 1 of 
the Internal Revenue Code of 1986 other than section 132(a)(4), the 
value of any fringe benefit that would not be unreasonable or 
administratively impracticable to account for is includible in the 
employee's gross income. Thus, except as provided in paragraph (d)(2) of 
this section, the provision of any cash fringe benefit is never 
excludable under section 132(a) as a de minimis fringe benefit. 
Similarly except as otherwise provided in paragraph (d) of this section, 
a cash equivalent fringe benefit (such as a fringe benefit provided to 
an employee through the use of a gift certificate or charge or credit 
card) is generally not excludable under section 132(a) even if the same 
property or service acquired (if provided in kind) would be excludable 
as a de minimis fringe benefit. For example, the provision of cash to an 
employee for a theatre ticket that would itself be excludable as a de 
minimis fringe (see paragraph (e)(1) of this section) is not excludable 
as a de minimis fringe.
    (d) Special rules--(1) Transit passes. A public transit pass 
provided at a discount to defray an employee's commuting costs may be 
excluded from the employee's gross income as a de minimis fringe if such 
discount does not exceed $21 in any month. The exclusion provided in 
this paragraph (d)(1) also applies to the provision of tokens or fare 
cards that enable an individual to travel on the public transit system 
if the value of such tokens and fare cards in any month does not exceed 
by more than $21 the amount the employee paid for the tokens and fare 
cards for such month. Similarly, the exclusion of this paragraph (d)(1) 
applies to the provision of a voucher or similar instrument that is 
exchangeable solely for tokens, fare cards, or other instruments that 
enable the employee to use the public transit system if the value of 
such vouchers and other instruments in any month does not exceed $21. 
The exclusion of this paragraph (d)(1) also applies to reimbursements 
made by an employer to an employee after December 31, 1988, to cover the 
cost of commuting on a public transit system, provided the employee does 
not receive more than $21 in such reimbursements for commuting costs in 
any given month. The reimbursement must be made under a bona fide 
reimbursement arrangement. A reimbursement arrangement will be treated 
as bona fide if the employer establishes appropriate procedures for 
verifying on a periodic basis that the employee's use of public 
transportation for commuting is consistent with the value of the benefit 
provided by the employer for that purpose. The amount of in-kind public 
transit commuting benefits and reimbursements provided during any month 
that are excludible under this paragraph (d)(1) is limited to $21. For 
months ending before July 1, 1991, the amount is $15 per month. The 
exclusion provided in this paragraph (d)(1) does not apply to the 
provision of any benefit to defray public transit expenses incurred for 
personal travel other than commuting.
    (2) Occasional meal money or local transportation fare--(i) General 
rule.

[[Page 594]]

Meals, meal money or local transportation fare provided to an employee 
is excluded as a de minimis fringe benefit if the benefit provided is 
reasonable and is provided in a manner that satisfies the following 
three conditions:
    (A) Occasional basis. The meals, meal money or local transportation 
fare is provided to the employee on an occasional basis. Whether meal 
money or local transportation fare is provided to an employee on an 
occasional basis will depend upon the frequency i.e. the availability of 
the benefit and regularity with which the benefit is provided by the 
employer to the employee. Thus, meals, meal money, or local 
transportation fare or a combination of such benefits provided to an 
employee on a regular or routine basis is not provided on an occasional 
basis.
    (B) Overtime. The meals, meal money or local transportation fare is 
provided to an employee because overtime work necessitates an extension 
of the employee's normal work schedule. This condition does not fail to 
be satisifed merely because the circumstances giving rise to the need 
for overtime work are reasonably foreseeable.
    (C) Meal money. ln the case of a meal or meal money, the meal or 
meal money is provided to enable the employee to work overtime. Thus, 
for example, meals provided on the employer's premises that are consumed 
during the period that the employee works overtime or meal money 
provided for meals consumed during such period satisfy this condition.

In no event shall meal money or local transportation fare calculated on 
the basis of the number of hours worked (e.g., $1.00 per hour for each 
hour over eight hours) be considered a de minimis fringe benefit.
    (ii) Applicability of other exclusions for certain meals and for 
transportation provided for security concerns. The value of meals 
furnished to an employee, an employee's spouse, or any of the employee's 
dependents by or on behalf of the employee's employer for the 
convenience of the employer is excluded from the employee's gross income 
if the meals are furnished on the business premises of the employer (see 
section 119). (For purposes of the exclusion under section 119, the 
definitions of an employee under Sec. 1.132-1(b) do not apply.) If, for 
a bona fide business-oriented security concern, an employer provides an 
employee vehicle transportation that is specially designed for security 
(for example, the vehicle is equipped with bulletproof glass and armor 
plating), and the conditions of Sec. 1.132-5(m) are satisfied, the 
value of the special security design is excludable from gross income as 
a working condition fringe if the employee would not have had such 
special security design but for the bona fide business-oriented security 
concern.
    (iii) Special rule for employer-provided transportation provided in 
certain circumstances. (A) Partial exclusion of value. If an employer 
provides transportation (such as taxi fare to an employee for use in 
commuting to and/or from work because or unusual circumstances and 
because, based on the facts and circumstances, it is unsafe for the 
employee to use other available means of transportation, the excess of 
the value of each one-way trip over $1.50 per one-way commute is 
excluded from gross income. The rule of this paragraph (d)(2)(iii) is 
not available to a control employee as defined in Sec. 1.61-21(f) (5) 
and (6).
    (B) ``Unusual circumstances''. Unusual circumstances are determined 
with respect to the employee receiving the transportation and are based 
on all facts and circumstances. An example of unusual circumstances 
would be when an employee is asked to work outside of his normal work 
hours (such as being called to the workplace at 1:00 am when the 
employee normally works from 8:00 am to 4:00 pm). Another example of 
unusual circumstances is a temporary change in the employee's work 
schedule (such as working from 12 midnight to 8:00 am rather than from 
8:00 am to 4:00 pm for a two-week period).
    (C) ``Unsafe conditions''. Factors indicating whether it is unsafe 
for an employee to use other available means of transportation are the 
history of crime in the geographic area surrounding the employee's 
workplace or residence and the time of day during which the employee 
must commute.
    (3) Use of special rules or examples to establish a general rule. 
The special

[[Page 595]]

rules provided in this paragraph (d) or examples provided in paragraph 
(e) of this section may not be used to establish any general rule 
permitting exclusion as a de minimis fringe. For example, the fact that 
$252 (i.e., $21 per month for 12 months) worth of public transit passes 
can be excluded from gross income as a de minimis fringe in 1992 does 
not mean that any fringe benefit with a value equal to or less than $252 
may be excluded as a de minimis fringe. As another example, the fact 
that the commuting use of an employer-provided vehicle more than one day 
a month is an example of a benefit not excludable as a de minimis fringe 
(see paragraph (e)(2) of this section) does not mean that the commuting 
use of a vehicle up to 12 times per year is excludable from gross income 
as a de minimis fringe.
    (4) Benefits exceeding value and frequency limits. If a benefit 
provided to an employee is not de minimis because either the value or 
frequency exceeds a limit provided in this paragraph (d), no amount of 
the benefit is considered to be a de minimis fringe. For example, if, in 
1992, an employer provides a $50 monthly public transit pass, the entire 
$50 must be included in income, not just the excess value over $21.
    (e) Examples--(1) Benefits excludable from income. Examples of de 
minimis fringe benefits are occasional typing of personal letters by a 
company secretary; occasional personal use of an employer's copying 
machine, provided that the employer exercises sufficient control and 
imposes significant restrictions on the personal use of the machine so 
that at least 85 percent of the use of the machine is for business 
purposes; occasional cocktail parties, group meals, or picnics for 
employees and their guests; traditional birthday or holiday gifts of 
property (not cash) with a low fair market value; occasional theater or 
sporting event tickets; coffee, doughnuts, and soft drinks; local 
telephone calls; and flowers, fruit, books, or similar property provided 
to employees under special circumstances (e.g., on account of illness, 
outstanding performance, or family crisis).
    (2) Benefits not excludable as de minimis fringes. Examples of 
fringe benefits that are not excludable from gross income as de minimis 
fringes are: season tickets to sporting or theatrical events; the 
commuting use of an employer-provided automobile or other vehicle more 
than one day a month; membership in a private country club or athletic 
facility, regardless of the frequency with which the employee uses the 
facility; employer-provided group-term life insurance on the life of the 
spouse or child of an employee; and use of employer-owned or leased 
facilities (such as an apartment, hunting lodge, boat, etc.) for a 
weekend. Some amount of the value of certain of these fringe benefits 
may be excluded from income under other statutory provisions, such as 
the exclusion for working condition fringes. See Sec. 1.132-5.
    (f) Nonapplicability of nondiscrimination rules. Except to the 
extent provided in Sec. 1.132-7, the nondiscrimination rules of section 
132(h)(1) and Sec. 1.132-8 do not apply in determining the amount, if 
any, of a de minimis fringe. Thus, a fringe benefit may be excludable as 
a de minimis fringe even if the benefit is provided exclusively to 
highly compensated employees of the employer.

[T.D. 8256, 54 FR 28615, July 6, 1989, as amended by T.D. 8389, 57 FR 
1871, Jan 16, 1992; 57 FR 5982, Feb. 19, 1992]