Which of the following benefits cannot be excluded as a no-additional-cost service fringe benefit?
A)Free tax return preparation from a client
B)Complimentary dry cleaning for employees at a laundry company
C)A car wash at an automobile dealership
D)Free local phone service for phone company employees

Question

Quizplus · Accepted Answer

A no-additional-cost service fringe benefit allows employees to receive services from their employer for free or at a reduced cost without it being considered taxable income, provided the service does not cause the employer to incur any substantial additional costs. Free tax return preparation from a client does not fit this definition because it involves a service that is not being directly offered by the employer but rather by a third party (the client), and thus cannot be excluded as a no-additional-cost service fringe benefit. Choices B, C, and D involve services that the employers are directly offering as part of their business operations, which could potentially qualify for exclusion if they meet the IRS criteria.

Which of the Following Benefits Cannot Be Excluded as a No-Additional-Cost