1-4: Miscellaneous payments

Effective: July 1, 1994
Revised: October 15, 2025
Approved by: Van Christensen
References: IRS Publication 15-B

Purpose

This policy outlines the conditions and taxability of payments for employee meals, professional dues, license fees, and qualified transportation expenses.

This policy does not address the specific way to make a payment or the system to use. See policy 1-1: Employee payments general policies and procedures.

Definitions

Agency – Any agency, board, bureau, commission, office, department, or other administrative subunit of the executive branch of state government.

De minimis fringe benefits – A small benefit provided by an employer that is so minor that accounting for it would be unreasonable or impractical.

Designee – The person who has written permission from the division director to act on the division director’s behalf.

Per diem – The generic term for the federal travel reimbursement rates, sometimes called GSA rates. Rates can be found on the U.S. General Services Administration website.

Policy

A – Agencies may pay for employee meals

1 – Agencies may pay for an employee’s meal when situations make it necessary if approved by the division director or designee. For example, a meal might be provided so that the employee can work overtime, is available for an emergency, etc.

1a – This policy is not applicable when an employee is traveling. See policy 10-7 : Meals and incidental expenses.

1b – Employee meals may be purchased as part of a group gathering. See policy 22-1: Group gatherings. However, this policy may be used in determining taxability.

2 – Provided meals are generally not taxable when:

the value of the meal is de minimis; and
the meal is provided infrequently; OR
the meal is provided on the business premises; and
the meal is provided for the employer’s convenience.

3 – Meals are taxable to the employee when provided to improve general morale or goodwill, to attract prospective employees, or to provide a form of additional compensation.

4 – Agencies may pay taxable meal allowances that do not exceed meal per diem.

4a – All meal allowances are taxable due to the administrative burden of maintaining an accountable plan as required by the IRS.

B – Agencies may pay for certifications, professional licenses, and membership dues

1 – Agencies may pay for certifications, professional licenses, and/or membership dues if there is a business purpose and it is in the best interest of the state.

2 – Employees must obtain pre-approval from their division director or designee before any costs are incurred.

3 – Payments for certifications, professional licenses, and membership dues are considered job-related expenses and are not taxable.

C – Agencies may pay for qualified transportation expenses

1 – Agencies may reimburse or pay for employees’ qualified transportation expenses. These expenses include the cost(s) of:

rides in a commuter highway vehicle between the employee’s home and work place;
transit passes used for commuting to and from work; and
qualified parking.

1a – Qualified parking includes parking on or near the business premises or the location from which employees commute to work using mass transit. It does not include parking at or near an employee’s home.

2 – Qualified transportation expenses must not exceed $325 per month per person for transit passes and rides in commuter highway vehicles and $325 per month per person for qualified parking (total of $650).

3 – Payments of qualified transportation expenses are nontaxable if the expenses do not exceed the above amounts.