"No free lunch - or breakfast - for companies as IRS weighs tax-exempt meal rules"Bloomberg News
Marianna Dyson was quoted regarding the Internal Revenue Service's (IRS) recent scrutiny of the tax implications of free meals offered to certain company employees, which the Department of Treasury has included in its list of administrative priorities for the year. Technology companies that use their well-stocked cafeterias as a lure for prospective employees and as a way to keep them on campus for longer hours have been challenged by the IRS in recent years, Dyson said. "The IRS has been particularly active on the West Coast with respect to any perks. They're trying to tamp this down. I think they see there's been a lot of freewheeling delivery of this benefit in these fast-moving workplaces."
Under current U.S. tax laws, employees don't have to pay taxes on meals provided "for the convenience of the employer" and companies can set up fully cost-deductible cafeterias to serve employees. Dyson said the cafeterias serve the companies' interests by keeping people at work. "They don't want their people leaving, particularly if they have to get in cars and go find a place," she said. "They're gone longer. They lose time. They lose the opportunity to be in a setting where they're talking together."
One area that is still unclear is the IRS definition of meals. For example, Dyson said she's had the IRS tell her that a bagel is more like a meal than a snack. "The IRS's view of 'meal' may not be the classic example of the food chart that you and I are thinking of," she said. "They're going to interpret a meal liberally."
This article was republished in The Washington Post, Chicago Tribune and BNA Daily Report for Executives on September 4, 2014, and appeared in BNA Pension & Benefits Reporter on September 9, 2014.