In a recent case, the IRS found coaches’ “golf shirts”, etc. – provided by the college – to be taxable to the coaches.


Denali Christian College (DCC) is a public charity and a school under I.R.C. sections 501(c)(3) and 170(b)(1)(A)(ii). The Denali Kodiaks are athletic teams that represent DCC in several sports including basketball, volleyball, baseball, softball, tennis, and cross country.
Every coach (head coach and assistant coach) has an employment agreement with DCC. The coaches all receive athletic clothing from DCC (in school colors and with the DCC and/or Kodiak logo). Generally, these items of apparel are worn at games, practices, and other venues representing the College.

DCC’s CFO calls us to ask whether the value of this clothing is taxable to the coaches. We answer that – in most cases – according to the IRS, yes, it is.


From IRS Fringe Benefits Guide:
Work Clothes and Uniform Allowances and Reimbursements
Clothing or uniforms are excluded from wages of an employee if they are:
• Specifically required as a condition of employment, and
• Are not worn or adaptable to general usage as ordinary clothing.

From recent IRS ruling with a major university:


The value of the fringe benefit is taxable, unless there is a statute or regulation that excludes them. Internal Revenue Code section (IRC) 61 provides that gross income means all income from whatever source derived, including compensation in the form of fringe benefits. There is no exclusion for athletic clothing provided to coaches or assistant coaches (this clothing would be adaptable to personal use).

The clothing provided to the athletic coaches is a direct result of the employment with the University. The clothing allotted to the athletic coaches is suitable for general wear and would not qualify as a section 162 expense. The items are taxable to the employee. An adjustment is warranted per IRC 3101, 3111 and 3402… The clothing is taxable as wages and subject to Social Security, Medicare and Federal Income Tax.

Bottom Line

• The IRS does not tax many “working condition fringe benefits” if these benefits meet certain criteria.
• The Internal Revenue Code generally allows that “uniforms” provided by employers, that are not adaptable to general use as ordinary clothing, may be non-taxable to employees.
• This “nontaxable fringe benefit” clothing must also be deductible by the employee under the Internal Revenue Code and/or Regulations.
• In a recent exam, the IRS found coaches’ apparel – provided by a university – was taxable to the coaches.

Specific questions? Email Dave Moja.

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.