5 ms·

All that can be taxed as well. At the risk of increased compliance cost?

namibj 8y ago
Just count every benefit one can feasibly calculate a dollar amount for the company provides the employee to the income for purposes of calculating income tax due. In German law there is a phrase for that, geldwerter Vorteil, formally Sachbezug. The wording is: > EStG §8 Abs. 2 Einnahmen, die nicht in Geld bestehen (Wohnung, Kost, Waren, Dienstleistungen und sonstige Sachbezüge), sind mit den um übliche Preisnachlässe geminderten üblichen Endpreisen am Abgabeort anzusetzen. This translates to: > Income, which does not consist of money (housing, food, goods, service and other employee benefits), are to be taken at the, reduced by usual price discounts, usual end prices at the place of fulfillment. There were minor re-orderings, due to the German language having somewhat different rules regarding word ordering, and some words not mapping 1:1 to their English counterpart. As you can see by the strange sentence structure in the translation, I skipped any such cosmetic changes, only using the bare minimum to try to keep the semantic of the predominant parsing the same as in the original.
- chimeracoder 8y ago
  > Income, which does not I believe you actually need to remove the comma there, so it becomes > Income which does not English and German have different rules for commas surrounding relative clauses. In English, including the comma changes the meaning of the sentence, and I'm pretty sure the meaning implied by the version of the sentence without this comma is the correct one (equivalent to the intended meaning in German). You'd also need to remove the comma at the end of the clause (before "are"). In any case: what you're describing seems to be analogous to what the US already does with regards to tax treatment of benefits.
- closeparen 8y ago
  It's easy to fudge and difficult to investigate whether employee use of company assets/funds is actually compensation or actually for business purposes. I'm a software engineer. My company assigns me a Macbook Pro and iPhone with data plan to do my work, use 2-factor auth, and answer PagerDuty. It doesn't make any effort to stop me from using these devices as my personal daily drivers. Anecdotally, my coworkers do. If you're the kind of person to buy a new Mac and iPhone every 2 years, having the company do it for you saves $1500+/yr. Is that compensation? Maybe it depends on how the devices are used. Well, now you've got the tax authorities poring over MDM logs trying to tell how many minutes of screen-on time were business vs. personal. Yikes. I've been a field technician. We had a pool of company cars at the office for visiting client sites. For some jobs, it did not make geographical sense to drive my personal car to the office and switch, so a company car became my daily commuter for a while. Was this compensation? If the company car was ever the most readily accessible in the driveway, I may even have used it for a purely personal errand in the evening. Would it have been compensation then? Maybe it depends on what proportion of use this accounted for. Now you've got the tax authorities poring over GPS logs trying to determine which POIs I drove to and from were work-related, and we're arguing about whether it was my house or the office that needed toilet paper when I made a particular CVS run. Assuming there even are GPS logs. I've been asked to take meetings and work with adjacent teams at our satellite offices. I obviously take advantage of my time in a new city to see the sights. For what proportion of the trip do I need to be in the office for it to count as work vs. work underhandedly paying for a personal vacation, and how are you going to check? Entry leaves a paper trail, exit doesn't. What if I just badge into our satellite office each day for the free coffee and then go about my vacation? Often the whitelisted hotels in our travel booking system are nicer and more expensive than anything I'd book personally. They're in keeping with the general high quality of our offices and equipment, but nicer than they need to be to fulfill the business purposes of the trip. Is this a form of compensation? Directors and above get to fly first class. Cattle class gets your ass to the meeting just the same. Is that a form of compensation? Now you're in the business of benchmarking what is a reasonable price to for travel/lodging in a given city at a given time under specific parameters (advance notice, number of travelers, etc). And what if your manager says he authorized first class so that your productivity wouldn't take as much of a hit? Does Gogo even keep good enough logs to tell whether I was really using the company VPN during the flight? This is not to say you should throw up your hands. The IRS certainly doesn't. It gets into the weeds on all of this, at least as to whether the business can deduct the expense (not so much whether to count extra income for the employee). But this stuff is incredibly nuanced and complex, and there's more than enough room in that complexity to hide a scenario where the employer pays much of the employee's living expenses tax-free in lieu of salary.
  - namibj 8y ago
    You certainly have a good point. There is quite some room, sure, but not enough for full-scale blatant abuse. Now, to the classification of your travel to the satellite office. Here in Germany your employer has to keep records of sufficient detail to show the iirc. customs office (as they are assigned to keep an eye on this, as far as I remember), that you did not work more than 10 hours on any single day, and not more than 8 hours per workday on average over usually 3 months. So the time after those 8/10 hours are not work, and the tax office doesn't care much about where you spend your time off after work. Sure, it's a nice job (if you don't have a family), if you fly business class around to all the little satellite offices for just 8 hours or work, possibly even staying the weekend (as it is cheaper to stay than to fly you back home, which should be the point where it counts as compensation for taxes, e.g., the additional cost of the hotel, compared to flying you back and forth, would be counted as compensation). The champagne you drink on the flight, at least as far as it costs more than water, should/would count as compensation. The nicer seat shouldn't, because the increased comfort isn't really a material benefit. If they pay you a nicer seat than they can explain with less of a productivity hit, they might themselves need to argue differently for why they paid for it, when they themselves get an audit. And while I don't know the IRS, I assume they compare the compensation listed by the employer with that listed by the employee. So this would be noticed, and the IRS might well claim tax fraud. Sure, not everyone cares, but this should give them enough to go after blatant abusers.

Just count every benefit one can feasibly calculate a dollar amount for the company provides the employee to the income for purposes of calculating income tax due. In German law there is a phrase for that, geldwerter Vorteil, formally Sachbezug. The wording is: > EStG §8 Abs. 2 Einnahmen, die nicht in Geld bestehen (Wohnung, Kost, Waren, Dienstleistungen und sonstige Sachbezüge), sind mit den um übliche Preisnachlässe geminderten üblichen Endpreisen am Abgabeort anzusetzen. This translates to: > Income, which does not consist of money (housing, food, goods, service and other employee benefits), are to be taken at the, reduced by usual price discounts, usual end prices at the place of fulfillment. There were minor re-orderings, due to the German language having somewhat different rules regarding word ordering, and some words not mapping 1:1 to their English counterpart. As you can see by the strange sentence structure in the translation, I skipped any such cosmetic changes, only using the bare minimum to try to keep the semantic of the predominant parsing the same as in the original.

chimeracoder 8y ago
> Income, which does not I believe you actually need to remove the comma there, so it becomes > Income which does not English and German have different rules for commas surrounding relative clauses. In English, including the comma changes the meaning of the sentence, and I'm pretty sure the meaning implied by the version of the sentence without this comma is the correct one (equivalent to the intended meaning in German). You'd also need to remove the comma at the end of the clause (before "are"). In any case: what you're describing seems to be analogous to what the US already does with regards to tax treatment of benefits.
closeparen 8y ago
It's easy to fudge and difficult to investigate whether employee use of company assets/funds is actually compensation or actually for business purposes. I'm a software engineer. My company assigns me a Macbook Pro and iPhone with data plan to do my work, use 2-factor auth, and answer PagerDuty. It doesn't make any effort to stop me from using these devices as my personal daily drivers. Anecdotally, my coworkers do. If you're the kind of person to buy a new Mac and iPhone every 2 years, having the company do it for you saves $1500+/yr. Is that compensation? Maybe it depends on how the devices are used. Well, now you've got the tax authorities poring over MDM logs trying to tell how many minutes of screen-on time were business vs. personal. Yikes. I've been a field technician. We had a pool of company cars at the office for visiting client sites. For some jobs, it did not make geographical sense to drive my personal car to the office and switch, so a company car became my daily commuter for a while. Was this compensation? If the company car was ever the most readily accessible in the driveway, I may even have used it for a purely personal errand in the evening. Would it have been compensation then? Maybe it depends on what proportion of use this accounted for. Now you've got the tax authorities poring over GPS logs trying to determine which POIs I drove to and from were work-related, and we're arguing about whether it was my house or the office that needed toilet paper when I made a particular CVS run. Assuming there even are GPS logs. I've been asked to take meetings and work with adjacent teams at our satellite offices. I obviously take advantage of my time in a new city to see the sights. For what proportion of the trip do I need to be in the office for it to count as work vs. work underhandedly paying for a personal vacation, and how are you going to check? Entry leaves a paper trail, exit doesn't. What if I just badge into our satellite office each day for the free coffee and then go about my vacation? Often the whitelisted hotels in our travel booking system are nicer and more expensive than anything I'd book personally. They're in keeping with the general high quality of our offices and equipment, but nicer than they need to be to fulfill the business purposes of the trip. Is this a form of compensation? Directors and above get to fly first class. Cattle class gets your ass to the meeting just the same. Is that a form of compensation? Now you're in the business of benchmarking what is a reasonable price to for travel/lodging in a given city at a given time under specific parameters (advance notice, number of travelers, etc). And what if your manager says he authorized first class so that your productivity wouldn't take as much of a hit? Does Gogo even keep good enough logs to tell whether I was really using the company VPN during the flight? This is not to say you should throw up your hands. The IRS certainly doesn't. It gets into the weeds on all of this, at least as to whether the business can deduct the expense (not so much whether to count extra income for the employee). But this stuff is incredibly nuanced and complex, and there's more than enough room in that complexity to hide a scenario where the employer pays much of the employee's living expenses tax-free in lieu of salary.
- namibj 8y ago
  You certainly have a good point. There is quite some room, sure, but not enough for full-scale blatant abuse. Now, to the classification of your travel to the satellite office. Here in Germany your employer has to keep records of sufficient detail to show the iirc. customs office (as they are assigned to keep an eye on this, as far as I remember), that you did not work more than 10 hours on any single day, and not more than 8 hours per workday on average over usually 3 months. So the time after those 8/10 hours are not work, and the tax office doesn't care much about where you spend your time off after work. Sure, it's a nice job (if you don't have a family), if you fly business class around to all the little satellite offices for just 8 hours or work, possibly even staying the weekend (as it is cheaper to stay than to fly you back home, which should be the point where it counts as compensation for taxes, e.g., the additional cost of the hotel, compared to flying you back and forth, would be counted as compensation). The champagne you drink on the flight, at least as far as it costs more than water, should/would count as compensation. The nicer seat shouldn't, because the increased comfort isn't really a material benefit. If they pay you a nicer seat than they can explain with less of a productivity hit, they might themselves need to argue differently for why they paid for it, when they themselves get an audit. And while I don't know the IRS, I assume they compare the compensation listed by the employer with that listed by the employee. So this would be noticed, and the IRS might well claim tax fraud. Sure, not everyone cares, but this should give them enough to go after blatant abusers.