FIACCT 05-03_09 Payments – Employee reimbursements – uniform allowance

Effective: July 1, 1994
Revised: September 1, 2006
Reviewed: 

Purpose

This policy defines the policies and procedures of the Division of Finance for payment of a uniform allowance.

---

Policy

State employees may receive an allowance for uniform clothing needed for their current positions. The individual department sets both the policy for qualifying and the allowance amount. The allowance should be reasonable and should be to cover expenses only.

NOTE: For purposes that go beyond the intent of providing standard uniform clothing (i.e., business suits, etc.), an allowance should not be provided by the State. To comply with IRS rules, uniform allowances must be classified as taxable or non-taxable. To be non-taxable, the allowance must be for a uniform that is:

1. Specifically required as a condition of employment

and

2. Not of a type adaptable to general or continued usage outside of work (in other words, the clothing cannot take the place of regular clothing).

NOTE: Uniforms of police officers, fire fighters, nurses, and bus drivers qualify as uniforms and are non taxable. Uniforms that are represented by regular clothing worn of a specific color or style do not qualify. For example, white shirts, overalls, and shoes worn by painters do not qualify as uniforms. Also, placing an insignia on regular clothing does not make it qualify as a uniform.

Conversely, the allowance is taxable if one or both of the above conditions are not met. Also, if the employee spends less than the amount given him, the difference is taxable. (This is up to the employee to prove in the event of an IRS audit.)

The Division of Finance Payroll Section processes the information submitted to pay an employee for a uniform allowance. The uniform allowance will be included in the employee’s next payroll check.

If the department pays for the clothing directly (i.e., the employee picks out the clothes and the department pays the vendor on a GAX or PRC, Form FI 50), the department should send a memo to the Director of Finance with the following information:

Š How they pay for the uniforms.
Š Classes (titles) of employees who receive uniform allowances.
Š Description of the type of uniform by class.
Š Reason for which the uniform is required or paid.
Š Cost (dollar amount) per year for each employee. This is required because the Division of Finance will review the request to determine if it meets IRS guidelines. If the uniform is taxable according to the IRS rules, the employee will be taxed even if a vendor is paid directly. The department should update their memo to the Director of Finance when changes are made in any of the above items.

---

Procedures

Uniform Allowances Paid Through Payroll System