Taxable Fringe Benefits

For all those called to serve at the front lines of IRC compliance, time and energy management collide nonstop for the next two months.  As a member of this particular group, I've noticed an increasing interest on my part in managing how I spend my time at work.  This perspective presumably accounts for my intrigue with a story from the WSJ  about Congressional Representatives who use their government offices for lodging as well as work.  While I’ll admit to wanting to take the occasional nap in the office these days, actually sleeping there is pretty unappealing.  However, 33 House members have openly acknowledged literally snoozing on the job (outside of business hours).  According to the organization Citizens for Ethics and Responsibility in Washington  these folks may have good intentions, but are breaking the law on several counts. 

 Living in a House office violates the prohibition on using taxpayer resources for anything other than the performance of official duties.  The Members' Handbook states that the Member Representational Allowance may not be used for personal expenses. 

Further, under the Internal Revenue Code, members who sleep in their offices are receiving a taxable benefit. The IRS treats lodging as a taxable fringe benefit unless it is offered on the employer's business premises, is for the employer's convenience, and is required as a condition of employment. As living in a House office clearly is not a condition of serving in Congress, members must pay taxes for imputed income based on the fair market value of their lodging.

This got me musing about my response if one of these Representatives were a client of mine.  Would I advise them they’ve got “taxable fringe”?  It's a particularly tricky situation because when delivering the bad news that an item is taxable or not deductible I usually remind the person that they are paying me to tell them what the rules are.  I don’t make the rules and neither do they.  Of course, in this case though, we are talking about someone who actually does directly impact the rules on taxes.  In particular the House is the first stop on the train when it comes to tax legislation.  While remaining a committed member of the frugality caucus, I also think as a rule maker it’s important to be a rule follower. 

Of course, wherever you've got a Congress person in a confined space for a period of time, there are usually a number of professionals who want to join them.  What isn’t addressed here is what if you are in a line of work that would make attendance at a Congressional office sleep over party deductible?  The rules are the same for everyone in this case.  If it’s a requirement of your employer, keep your receipts and log any non-reimbursed mileage.