The practice of providing busy worker with on-site meals and snacks to keep them fueled up and close to their computers may be in jeopardy.
The free meals for employees deal is generally associated with Silicon Valley firms like Google that serve up thousands of such meals annually in company cafeterias and break rooms. The IRS has taken a hands-off position on the practice, to date not including it as a taxable perk.
But it's been making noises about re-examining its position. In late July, its signal that it might reassess its position got stronger when it mentioned on-site employee meals in its annual Priority Guidance Plan as one matter it would spend more time pondering.
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Now, the guidance plan includes hundreds of IRS "priorities;" for instance, the excise tax (Cadillac tax) on high cost employee benefits plans is among them.
But, reports the South Florida Business Journal, the mere inclusion of the free meals in the plan suggests that, somewhere off in the future, such meals might be taxable.
The newspaper indicated none of the major employers who offer such perks are about to cancel their free meal deal just because the IRS has moved the matter up on the priority chain.
"Sometimes it takes years for (regulations) to be written," Evan Abrams, a tax attorney with Farella Braun +Martel, told the newspaper. "Even if it's a priority, it's not clear anything will change overnight. Courts are more deferential to regulations; they would carry more weight than simply the guidance if they (IRS) do publish them."
Still, it's one more thing that the HR department at such employers will have to add to the ever-lengthening watch list.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
