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Anne
Anne, Master Tax Preparer
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Are the fees incurred by an employer associated with obtaining

Customer Question

Are the fees incurred by an employer associated with obtaining H1b visas, such as the attorney's fees for the petition, visa application fees, translation fees, etc., taxable as income/fringe benefits to the employee? Is there a revenue ruling or any other type of document that addresses this, and if so, can you provide me with a citation so that I may reference it?
Submitted: 4 years ago.
Category: Tax
Expert:  BK-CPA replied 4 years ago.

My initial thoughts are that, if you reimburse all employees for this sort of thing on an accountable basis, and you do not discriminate, you would be operating in accordance with the rules for a Section 125 cafeteria plan. The employees could receive the benefit of having their fees payed for or treated as cash compensation.

 

See IRC Sec. 125 here:

 

http://www.law.cornell.edu/uscode/26/usc_sec_26_00000125----000-.html

 

§ 125. Cafeteria plans

How Current is This?

(a) General rule Except as provided in subsection (b), no amount shall be included in the gross income of a participant in a cafeteria plan solely because, under the plan, the participant may choose among the benefits of the plan.

 

(b) Exception for highly compensated participants and key employees

(1) Highly compensated participants In the case of a highly compensated participant, subsection (a) shall not apply to any benefit attributable to a plan year for which the plan discriminates in favor of-

 

...

 

 

(d) Cafeteria plan defined

For purposes of this section-

(1) In general The term "cafeteria plan" means a written plan under which-

(A) all participants are employees, and

(B) the participants may choose among 2 or more benefits consisting of cash and qualified benefits.

 

 

 

.....

 

 

(f) Qualified benefits defined For purposes of this section, the term "qualified benefit" means any benefit which, with the application of subsection (a), is not includible in the gross income of the employee by reason of an express provision of this chapter (other than section 106 (b), 117, 127, or 132). Such term includes any group term life insurance which is includible in gross income only because it exceeds the dollar limitation of section 79 and such term includes any other benefit permitted under regulations. Such term shall not include any product which is advertised, marketed, or offered as long-term care insurance.

Expert:  Anne replied 4 years ago.

An employer can not require an employee to be responsible for any costs associated with obtaining an H1 visa. If they can not require that the employee bear any costs, they can not count it as a "fringe benefit". See below link re: right/responsibilites of H1 Visa holders and H1 Visa Employers: (You will need to copy & paste this into your web browser)


 


http://www.immihelp.com/visas/h1b/h1-visa-holder-rights.html

Customer: replied 4 years ago.
<p>Although the employer has to pay the H1b petition and attorney's fees related to the petition/LCA, the employer is not required to pay the visa application fee or translation fees.  Are those costs therefore treated differently?  Is there anything in the IRC/revenue ruling that addresses this?</p>
Expert:  BK-CPA replied 4 years ago.

My answer was to assume they were taxable, in which case, they would not be taxable under Section 125.

 

The direct answer is that they are not taxable as fringes per the second answer posted. Any aspect of the costs above that do not fall under that direct answer can again be excluded under my (the first answer) above.

 

In other words, no, they are not taxable to employees, either because the law directly says they are not taxable and/or because the amounts are otherwise not taxable under a plan.

 

I assume this clears it up.

 

Thank you for your question, but do let me know if you need more clarification.

 

 

Expert:  BK-CPA replied 4 years ago.

My wife is also a CPA who travels the world for her company, auditing, on visas all the time. I can ask her when she gets back and will update with her comments if you like (let me know?).

 

In the mean time, if the other expert here has a direct answer (or any expert) I invite her to answer over me again. That expert should deserve the credit here of course too (my answer is still just my initial thoughts and is indirect despite being interesting and applicable I feel, but not the direct one you are looking for I understand).

 

Good luck!!

Expert:  Anne replied 4 years ago.
There are very strict rules that govern employer/employee responsibilities when it comes to paying the costs associated with acquiring and/or general fees associated with an H1 visa. If the employee agrees, in writing, and the fee is for the benefit of the employee, and is NOT for the actual acquiring of the visa, the employee may, at their discretion, voluntarily pay for certain fees. I am linking you to a web site that I think has excellent information on this subject for you. Again, you will need to copy & paste this into your web browser.

http://www.hammondlawfirm.com/FeesArticle07.18.2006.pdf


I hope this helps.

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Anne
Anne
Master Tax Preparer
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Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses