Q. (cont.) The TSA precheck fee is the expedited security screening program for travelers which is available for certain airlines, and we reimburse it for employees who travel frequently for business. I believe the IRS deems airline club membership payments as taxable income if reimbursed. I was told the TSA precheck fee would not be considered taxable income to the recipient, but what is the difference?
A. Precheck is a TSA program that many airlines participate in – it is considered a travel expense. We confirmed this with IRS specialist Mr. Roach (ID# 1003078868) – he acknowledged that this was a new question for him, but he believes the distinction is between luxury benefits (clubs) and convenience benefits (precheck). He referenced IRS Publications 15 and 463. Neither explicitly identifies the TSA precheck program, but cover the general principles of expense reimbursement.
Regarding airline club memberships as a luxury benefit, they were grouped in with club memberships in general (something that many business travelers complain about, but to no avail). They are considered to be in the same class as a country club membership and therefore (since 1994) are considered compensation: § 274(a)(3): (3) DENIAL OF DEDUCTION FOR CLUB DUES - Notwithstanding the preceding provisions of this subsection, no deduction shall be allowed under this chapter for amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or other social purpose.