DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE WASHINGTON, D.C. 20224 ‘March 4, 2015 MAR 0S “The Honorable Mark R. Warner United States Senator 4298 Salem Avenue, SW Roanoke Roanoke, VA 24011 Attention: Chris Monioudis: Dear Senator Wamer: | am responding to your letter of January 13, 2015, in which you asked whether the value of uniform clothing issued to employees by Virginia law enforcement agencies and fire departments is includible in the employee's income. ‘An employee can exclude from gross income arty fringe benefit which qualifies as a ‘working condition fringe under section 132(a)(3) of the internal Revenue Code. A “working condition fringe” includes any property or services an employer provided to an. employee to the extent that, if the employee paid for such property or services, the payment would be allowed as a deduction under section 162 of the Code as a trade or business expense. in other words, the value of uniforms a law enforcement agency or fire department provides to employees is not includible in the employees’ income if the employees would be allowed a business expense deduction for the purchase of the uniforms required to perform services for the employer. Section 162(a) of the Code generally allows as a deduction ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. As provided in Revenue Ruling 70-474, 1970-2 C.B. 34, payment for uniforms is allowed as a deduction under section 162 If the uniforms (1) are specifically required as a condition of employment, and (2) are not suitable for everyday wear. You asked whether there are specific artioles of clothing, or specific markings or labels on clothing, that make the clothing not suitable for everyday wear. Unfortunately, there is no comprehensive list of clothing, or labels or markings on clothing, that make the clothing suitable or unsuitabfe for everyday wear in all circumstances, Whether clothing is suitable for everyday wear depends on the partioular facts and circumstances. However, for military uniforms, the IRS has concluded that where regulations or military policy prohibits wearing the uniform while off duty, the uniform is not suitable for. everyday wear, and a deduction is allowable. Revenue Ruling 67-115, 1967-1 C.B. 30. Law enforcement agencies and fire departments, like the military, have legitimate Interests to protect by prohibiting off-duty employees from wearing uniforms. In cases ‘where a law enforcement agency orfire department has a policy of prohibiting off-duty2 ‘wearing of uniforms, the uniform Is properly viewed as not suitable for everyday wear and the value of the uniform is not includibie in the employeas' income. Ee Associate Chief Counsel (Income Tax & Accounting)