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Thread: Washington State tax rule re: onsite manager Washington

  1. #1
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    Default Washington State tax rule re: onsite manager Washington

    A question: My parents purchased a self-storage facility many years ago (30+). My dad is deceased now, and my mother is elderly, so my husband and I are taking on more and more responsibility for her commercial properties.

    We have a resident manager who receives a salary plus an apartment and all utilities. All she has to pay for is her personal phone and cable. She has to be on site, but can be in her own apartment whenever she wants...she just has to be available to answer the phone and go into the small office when someone comes in. She was complaining to my mother the other day to that she is sure she should be paid overtime because she works more than 40 hours per week, and that her apartment and utilities should not be considered taxable. I do not know what the arrangements were when she was hired many years ago, but I am curious as to what the law is. I believe a percentage of her apartment and utilities are considered taxable, is that correct? I already know that she is not owed overtime because she is considered an exempt employee. I've found the law pertaining to that, but haven't found anything about the apartment, etc.
    Thank you,
    Jennifer

  2. #2
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    Taxation of the apartment and utilities would be in the IRS guidelines about fringe benefits, publication 15b.

    https://www.irs.gov/publications/p15b/ar02.html

  3. #3
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    Totally taxable.

    I would look more closely at the exempt status.
    I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

  4. #4
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    I no longer have my payroll reference book (The Payroll Source) but I am going to give a slightly different answer.
    - IMO, there is a chance if the employee is required to by the employer and a very skeptical IRS actually agrees with the argument, that we have a non-taxable working condition fringe benefit here (the apartment). Now this is federal law only. State law is whatever it is. If you want to be sure, call up IRS. Just be clear that IRS is very slow to agree with this particular usage, even though it is legally supported. The key point in my mind is that the employee is literally locally on call 24 hours a day. The employer REQUIRES the employee to live there for work related reasons. Like a light house keeper.
    - Unrelated to the first potential exception, there is a seperate exception that says an employee can legally discount their product to their employee. I do not remember the magic number but I am guessing 15%. So if the apartment normally went for $1,000, the employer could legal charge the employee as little as $850 for it (assuming my 15% guess is right). The same principal would be good for Starbucks or American Airlines having an employee discount.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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