Ezel / IRS Rulings / 200911035

CCA 200911035: Directors who are not otherwise employees receive benefits as nonemployees

Number
200911035
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Director or
Topics
Employment taxes
Code sections
§ 3121
Ruling dated
February 10, 2009
Publicly released
March 13, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that directors acting only in their capacity as directors are not employees. A health benefit provided to a director who is not also an officer or other employee is therefore provided to a nonemployee. The tax treatment of other benefits depends on the particular benefit. Working condition fringe benefits can be provided to nonemployees, and the regulations impute a profit motive when the recipient is a bona fide volunteer.

Ruling snapshot

  • Question: How should benefits provided to directors who are not otherwise employees be treated?
  • Outcome: Advice given: the health benefit is provided to a nonemployee, while the taxability of other benefits depends on the benefit.
  • Key authorities: IRC § 3121; regulations governing working condition fringe benefits.

Full text (IRS public release)

ID: CCA_2009021010104341 Number: 200911035
Release Date: 3/13/2009
Office: -----------------------------
UILC: 3121.01-08

From: ---------------
Sent: Tuesday, February 10, 2009 10:10:44 AM
To: ----------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Subject: RE: questions about benefits to non-employees

Yes, you're right, ----------. You did mention that below, didn't you? Sorry if I diverted unnecessarily.

If all the benefit recipients at issue are directors, then in that capacity they are not employees. So if they are not an officer or other employee, then the health benefit is being provided to a nonemployee and we spin back to -----------answer. As to other benefits, the taxability depends upon the benefit. For example, working condition fringe benefits can be provided to nonemployees, and the regs even impute a profit motive if the person is a bona fide volunteer. ------ handles those issues principally so I’m copying ---------- on this email as well.

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