Checklist: Classifying Benefits as de minimis

The determination of whether an item is considered to be de minimis is based on the facts and circumstances of each case. There is no "bright line" test or specific dollar amount for determining whether something is de minimis. Instead, an employer must look at:

• The frequency with which an employee receives a similar kind of property or service; and
• The value of the property or service and whether it is so small as to make accounting for it unreasonable or administratively impractical.

Frequency. How often a benefit is provided by an employer to its employees is taken into account in determining whether it is unreasonable or administratively impractical to account for it. Ordinarily, frequency is measured on a per-employee basis.

Example 1: Clear Water, Inc. furnishes meals on a daily basis to its employee Ronald Pavin. The company does not furnish meals to any of its other 25 employees. The value of the meals is not de minimis with regard to Pavin, even though with respect to the employer's total work force the meals are provided "infrequently."

Where it is administratively difficult to determine the frequency on a per-employee basis, an employer may use the frequency with which the benefit is provided to the employer's work force as a whole. Then, a de minimis classification applies, even if one employee receives the benefit on a regular basis.

Special rule for cash or cash equivalents. In general, cash or cash equivalents (such as a gift certificate or credit cards) are considered easy to administer. These do not qualify as de minimis fringes even if they are used to purchase items that, if provided directly, would qualify as de minimis fringes. One exception applies to occasional meal money or local transportation fare under specified abnormal circumstances.