Generally, no. Because many employers offer employee discounts on the cost of some services, an employee will generally have to pay the full cost of such a service even if the employer pays all the expenses, including the part that involves the employee. Such offers are often made on a “guaranteed price, ” that is, the employer will pay a percentage of the total cost of the program at a certain point in time. If a price is based upon the value being offered, it is generally treated as a regular price, and cannot be included in the employee’s income. Thus, in effect, an offer to pay the employee for work performed by the dog is generally treated as a regular salary, and is therefore included in the employee’s income.
However, where a special discount (or “freebie”) that is only available for a limited time (for example, a one-time opportunity to pet a special furry friend) is offered, and not considered a regular price, the special offer, as well as the value of the item or service provided during its availability, is considered a benefit to the employer. The employer can be required to include this benefit in the employee’s income. In addition, the employee may be entitled to “compensation for the dog” from the employer, in the ordinary course of the business.
The definition of a “service” includes petting and bathing an animal. Whether any of these activities is a taxable service depends entirely upon the specific facts of each case.
Example 1: Employee pays $50 for service during a special event. The animal’s handler has a special request for her. For $20 more, the handler could bathe the dog herself.
Employee’s benefit = $50 + $100 for service.
Example 2: Employee offers an employee discount of $20 for a meal, $50 for a pet.
Employer’s benefit = $20
Example 3: Employee uses her own employee discount card on a $500 purchase of books. She can use it on services of any size she likes.
Employer’s benefit = $25 + $50 for books.
Do dogs enjoy special discounts?
Some employers offer dog-related discounts. However, these benefits generally cannot be considered as a part of the employee’s compensation.
Certain activities, such as riding horses or riding dogs, are generally not considered compensation for providing the services. For example, riding a horse while in a dog harness would not
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