The House Ways and Means Committee voted yesterday to block the Internal Revenue Service from collecting taxes on fringe benefits for still another year -- this time through June of 1981.
The action came on a voice vote after the panel again admitted it was stumped over how to handle the controversial issue. Previously, Congress had barred IRS from moving on the question until mid-1980.
The step marked yet another setback for the IRS, which has been pushing to begin collecting taxes on fringe benefits since its current commissioner, Jerome Kurtz, took over in 1977.
Although the law holds that all income is subject to tax unless specifically exempted, the government until now has not attempted to collect taxes on most fringe benefits, Kurtz, however, contends they are a form of income.
The issue has become a political hot potato because numerous taxpayers appear to believe it is unfair for the government to tax fringe benefits. Congressmen say they have been deluged by letters opposing any such move.
The Ways and Means Committee action yesterday would prohibit the IRS from issuing final regulations on the taxation of fringe benefits until the mid-1981 date -- effectively barring any enforcement of the current law.
Last week, the Senate approved a provisions in a regular appropriations bill preventing the IRS from using any of its money to collect taxes on fringe benefits. Either way, the message to the agency is clear.
Tax experts are divided on the fringe-benefits issue, with some calling for taxation of virtually every slide benefit or perquisite an employe receives and others contending the IRS is going too far.
Among the benefits Kurtz has cited as income are free airline tickets provided to stewardesses and waiver of tuition for children of college professors. Employe associations have argued these perks are part of the job.
The prohibition against taxing fringe benefits is one of several attempted IRS crackdowns that the two houses have blocked over the past two years either by legislation or informal order.
Just last week, the Senate voted again to bar the tax agency from enforcing civil rights laws requiring it to deny tax-exempt status to so-called "segregation academies -- private schools established to circumvent school integration.
And the lawmakers also have intervened to prevent the IRS from requiring restaurants to report tips given to waiters and waitresses, and from mandating tax-withholding for salesmen and other "independent contractors."
The agency has contended it has evidence of widespread abuses and evasion of taxes in both those areas. The IRS estimated this month it is losing about $26 billion a year in taxes stemming from income that goes unreported.
Yesterday's action by the Ways and Means Committee merely postpones any IRS efforts to collect taxes on fringe benefits and does not attempt to resolve the substantive question involved in the issue.