Moral Question

[Catholic]

Our employer gave us some cash as a holiday gift but did not report it on our W-2 forms. I contacted the IRS to see how to report it on my own tax return and was told that the employer was supposed to report these gifts to all of us. (The employer has since agreed to amend my individual W-2 to include this cash, but everyone else’s money will not be reported by the company.) The IRS representative asked for the name of the company, but I said that I did not want to incriminate anyone. He said since I brought it up, I should disclose the name, but did not press me for it further. Do I have a moral obligation to report the company?

 

[Newbie2]

Our employer gave us some cash as a holiday gift but did not report it on our W-2 forms. I contacted the IRS to see how to report it on my own tax return and was told that the employer was supposed to report these gifts to all of us. (The employer has since agreed to amend my individual W-2 to include this cash, but everyone else’s money will not be reported by the company.) The IRS representative asked for the name of the company, but I said that I did not want to incriminate anyone. He said since I brought it up, I should disclose the name, but did not press me for it further. Do I have a moral obligation to report the company?

Good question.

If someone, a friend, acquaintence or relative, told you that they received a similar cash bonus without reporting it, would there be a moral obligation to report them?

 

[NaturalEnquirer]

I suppose you ought to. I would venture to guess that it only becomes a “moral obligation” if the amount of the gift is pretty significant, or maybe if it involves a large number of people.

 

[Newbie2]

I suppose you ought to. I would venture to guess that it only becomes a “moral obligation” if the amount of the gift is pretty significant, or maybe if it involves a large number of people.

Good point. If you were to send the IRS off on a hunt for a few bucks, it’d take them away from going after more significant scofflaws. But at the same time, the morality isn’t necessarily directly related to the dollar amount; stealing a 5 cent piece of candy is still stealing.

 

[Texas_Roofer]

Our employer gave us some cash as a holiday gift but did not report it on our W-2 forms. I contacted the IRS to see how to report it on my own tax return and was told that the employer was supposed to report these gifts to all of us. (The employer has since agreed to amend my individual W-2 to include this cash, but everyone else’s money will not be reported by the company.) The IRS representative asked for the name of the company, but I said that I did not want to incriminate anyone. He said since I brought it up, I should disclose the name, but did not press me for it further. Do I have a moral obligation to report the company?

It depends on the dollar amount. Notice gifts and donations have dollar amounts associated with IRS guidelines. For example at the last Christmas party a variety of gifts were raffled with prizes varying from duds as a $0.99 toy to $300 in cash. Nobodies W-2 was changed to reflect the winnings. However if more than $5,000 were involved reporting should occur. For specifics call the IRS. This agent wants to know if the company has a pattern of non reporting transaction which total non trivial amounts.

btw both the Church, the IRS, and courts recognize “moot” which is an issue too small to matter

 

[NaturalEnquirer]

Good point. If you were to send the IRS off on a hunt for a few bucks, it’d take them away from going after more significant scofflaws. But at the same time, the morality isn’t necessarily directly related to the dollar amount; stealing a 5 cent piece of candy is still stealing.

True, but stealing the candy is probably not a grave matter.

 

[JimG]

Some employers give their employers turkeys or hams for Christmas. You mean this is reportable? Do they have to withhold FICA and Medicare tax on the turkey?

 

[NaturalEnquirer]

Some employers give their employers turkeys or hams for Christmas. You mean this is reportable? Do they have to withhold FICA and Medicare tax on the turkey?

If Texas Roofer’s figures are accurate (I have no idea, but they sound plausible), then they would only have to be reported if it was a five thousand dollar turkey. That’s a lot of bird.

 

[cam100]

I would NOT report the company to the IRS. You have NO obligation to report everyone who breaks a law. Do you call the cops every time you see someone speeding?

I would treat the income as a cash gift, and follow whatever procedures are required as the recipient of a cash gift. (I’m not an accountant, so I don’t really know). There is no reason to involve the company that gave you the gift.

 

[Sina]

Yes there is Cam. According to the Income tax Act ( or whatever it is called in the US ) the person who received the money must report it as income. It is not a gift. It is a bonus. You can’t just claim to be ignorant of tax rules.

I do agree that you don’t HAVE to report the company to the IRS. If that company gets audited for any other reason though, this might be discovered and all employees who were in receipt of this bonus will be issued re-assessments from the IRS with interest charges whether this was their fault or not.

 

[tm30]

If I’m not mistaken, the I.R.S. motto is “No good deed goes unpunished”.

 

[MAKirwan]

If I’m not mistaken, the I.R.S. motto is “No good deed goes unpunished”.

Without being offensive to anyone, the person who called the IRS in this issue was more moron than moral. Do you have any idea how much trouble you could cause for the person or company doing you the favor of giving you a gift. If you were having moral issues with receiving an untaxed gift then why not just give it back, or better still send it to me, I have no problem with spending it without being taxed. My moral obligations to the IRS are vastly more abused by the IRS than by me, and every dollar I can save from the IRS will never justify how much they take annually.
Your moral dilemma can be brought to ridiculous limits. Do you also attempt to pay tax on the coffee you get for nothing at work. This is also a form of gift.

Get real. Give to God what is God’s, He will make good use of it. Caear already gets too much and the more he gets the more waste can be justified.

 

[1ke]

Some employers give their employers turkeys or hams for Christmas. You mean this is reportable? Do they have to withhold FICA and Medicare tax on the turkey?

No. This falls under “fringe benefits” that are “de minimus.” It depends on the type of benefit, frequency, and value as to its taxability. The OP’s question was about cash-- and that is taxable no matter the amount, and the employer should have reported it as income.

Here’s the relevant IRS document, you have to scroll down quite a ways to reach the text…

irs.gov/publications/p15b/ar02.html#d0e351

From the IRS website:

*Examples of de minimis benefits include the following.

Occasional personal use of a company copying machine if you sufficiently control its use so that at least 85% of its use is for business purposes.

Holiday gifts, other than cash, with a low fair market value.

Group-term life insurance payable on the death of an employee’s spouse or dependent if the face amount is not more than $2,000.

Meals. See Meals, later.

Occasional parties or picnics for employees and their guests.

Occasional tickets for entertainment or sporting events.

Transportation fare. See Transportation (Commuting) Benefits, later. *

 

[NaturalEnquirer]

Without being offensive to anyone, the person who called the IRS in this issue was more moron than moral.

Hint - when you call someone a moron, they will probably be offended, even if you say “no offense”. Might consider different wording if that’s offending is not your intent. If that is your intent, don’t deny it.

Your moral dilemma can be brought to ridiculous limits. Do you also attempt to pay tax on the coffee you get for nothing at work. This is also a form of gift.

The original poster didn’t quantify the gift in any way. Might have been thousands of dollars. Should that be taxed?

 

[roanoker]

Your only moral obligation is to report it as a cash gift…Roanoker

 

[MAKirwan]

Hint - when you call someone a moron, they will probably be offended, even if you say “no offense”. Might consider different wording if that’s offending is not your intent. If that is your intent, don’t deny it.

The original poster didn’t quantify the gift in any way. Might have been thousands of dollars. Should that be taxed?

Try putting yourself in the position of the giver. A thank you gesture, given as cash which is maximum cost to the giver and maximum benefit to the receiver. If you gave a generous tip to a person working on your house on top of the official bill would you like to get a call from the IRS.

Again if there is a major moral queation for the receiver, just give it back. Call the IRS??? You have to be kidding me.

The receiver should be thankful for the extra. If a call is required let it be to the giver in the form of a thank you.

Again I say no offense intended, I am just blown away by why anyone would be interested in vounteering to pay more taxes than necessary. If you read the original post it says that some cash was given, while the point you make is valid that it does not quantify the amount, you need to stretch the issue to assume an amount that would raise an IRS flag.

 

[Catholic]

Thank you to everyone who offered your two cents. (That’s not taxable, is it?)