Baylor University
Tax & Compliance Department
Financial Services

Fringe Benefits
Important Documents

Fringe Benefits Manual

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Although not defined by the Internal Revenue Code (IRC) or Treasury Regulations in definite terms, a fringe benefit is any benefit provided by an employer to an employee outside the payment of salary/wages. Such a benefit can be in the form of cash or non-cash and includes, among other items, payments for an employee's professional dues, transportation, meals and lodging, club memberships, complimentary entertainment or sporting tickets, and service or property discounts. Fringe benefits also include payments to third parties on behalf of the employee or reimbursements to employees for previous expenses.

Unless expressly excluded or deferred until a later year under the IRC, all benefits received by an employee from an employer should be included in the employee's gross income in the year in which it is received. Two groups of fringe benefit exclusions exist: those found in Section 132 of the IRC and those found in other IRC sections. Those found in other IRC sections can be found under the link Miscellaneous Fringe Benefits to the right, and include University Housing, Educational Assistance, Awards and Other Presentations, and Travel and Entertainment Reimbursements.

Section 132 of the IRC excludes from employees' income such fringe benefits that fall into one of the following categories:


A no-additional cost service is defined as any service provided for use by the employee if the service is offered primarily for sale to students or third parties and Baylor incurs no substantial additional cost in providing the service to the employee. Examples of such no-additional cost services are:

  • Recreational Facilities
  • Tickets
  • Communication Services


A working condition fringe is any property or service provided to an employee that if the employee had paid for, the payment would be deductible as a business expense. Examples of such working condition fringes are:

  • Automobiles
  • Airplanes/Chartered Flights
  • Club Memberships
  • Professional Dues, Publications, & Meetings


A de minimis fringe is any property or service provided to an employee that has such a minimal value that accounting for it would be administratively impractical or unreasonable. Examples of working condition fringes are:

  • Tickets
  • Gifts
  • Awards & Presentations
  • Cafeterias & Dining Rooms


A qualified moving expense is any payment by Baylor University for expenses that would be deductible as moving expenses for the employee if the employee had paid the expenses.

Other Section 132 Fringe Benefits


A qualified employee discount is any discount on qualified products, merchandise, or services provided by Baylor University.


An eating facility fringe is the value of meals provided by Baylor University to employees at an University-operated eating facility under certain circumstances. An on-premises athletic facility fringe is the value of any on-premises athletic facility provided by Baylor University under certain circumstances.


A qualified transportation fringe exists in one of three forms: the use of a highway commuter vehicle, a transit pass, or qualified parking.