02.E.02 – Perquisites
Section: Human Resources
Area: Miscellaneous Benefits
1. PURPOSE
The guidelines concerning payment or reimbursement of specific types of expenses, known herein as perquisites, and the tax treatment thereof, is set forth in this document. This document does not address business expense reimbursements, which are covered in SAM 03.A.02, Entertainment Expenditures .
2. POLICY
All perquisites are treated as part of the compensation package of an individual. The human resources department of each university will serve as the repository for perquisite records, and authorization for existing and new perquisites should follow the authorization requirements for compensation changes. In addition, in accordance with United States income tax laws and regulations, items which are subject to Federal Income Tax should be treated by the employee as taxable income. The employer is responsible for including the value of taxable benefits in the employee's Form W-2, and the employee is responsible for maintaining appropriate documentation to support the deductibility of any employment-related expenses for Federal income tax purposes.
3. PROCEDURES
3.1. Perquisites include any tangible benefit provided to faculty and employees, including, but not limited to, housing, car allowance, leased car, spousal travel, insurance, club membership and maid services. Perquisites do not include reimbursable business expenses which are properly documented in accordance with IRS requirements and SAM 03.A.02. Perquisites are not entitlements to any class of employee, may be made available only after thorough and careful consideration of the benefit to the System, and must be specifically approved by the university's president (or designee) or by the Chancellor (or designee) as applicable.
3.2. All perquisites authorizations must be documented in the official personnel file of each individual.
3.3. For perquisites paid by accounts payable rather than through payroll, the accounts payable department will receive periodically (as authorized perquisites may change) from each President (or designee) or the Chancellor (or designee) as applicable, a listing of the personnel authorized for each category of perquisite. Disbursements for perquisites will not be made unless the employee is listed as authorized to receive the perquisite. Perquisites will be paid only through the accounts payable or payroll departments. Disbursements for perquisites will not be made from petty cash.
3.4. Perquisites will be reported as income to the employee on their Form W-2 unless appropriate documentation as to business use is provided in accordance with IRS requirements. It is the responsibility of the employee to maintain records in accordance with IRS guidelines to properly identify deductible items.
4. ANNUAL REPORTING
The president of each university (or designee) or the Chancellor (or designee), as applicable, will prepare annually, on or before January 30th, for the Vice Chancellor for Administration and Finance a summary of the nature and dollar amount of perquisites provided to personnel at each respective location.
RELATED STATUTES, POLICIES, OR REQUIREMENTS
U.S. Internal Revenue Code, 26 U.S.C. § 132 – Certain Fringe Benefits
IRS Publication 15-B – Employer's Tax Guide to Fringe Benefits
Issued: 05/15/1992
Last Reviewed/Revised: 10/18/2021
Responsible Office(s): Finance