The IRS Is Looking to Tax Employer-Provided Meals

By Natalie Johnson

Free employee meals may be slapped with a price tag as the Internal Revenue Service inches closer to deciding whether to tax the complimentary perk.
The IRS project, called the Priority Guidance Plan, would modify sections of the tax code encompassing employer-provided meals, adding a tax on to free meals for employees.
Under IRS scrutiny is whether the meals should remain tax-free exemptions.
If the plan were given the go-ahead, employer-provided food costs would be considered income to the employee, CNN reports. This means employees would have to file the combined costs of their free meals on their W-2 forms come tax season.
The IRS’ existing tax rules allow for free meals and beverages to be provided so long as the company can prove the perk is for the convenience of the employee.
The exemption is traditionally applied to employees working from remote locations far from restaurants or to workers on tight deadlines who do not have time for a lunch break, The Wall Street Journal reports.
But some tax lawyers argue companies, notably large technology firms known for extensive employee benefits, could be included under the exemption because free food often translates into longer work hours, The Wall Street Journal noted.
Steve Mopsick, a federal tax attorney who formerly worked for the IRS, told the South Florida Business Journal the IRS was “overstepping” its authority with the proposal.
“This is something that is done purely for the convenience for the employer,” Mopsick said. “To tax employees on the benefit of their free lunches is an outrage.”
If the IRS moves its plan past the review stage it could take a few years before the change takes effect, the Business Journal reports.
So at least for now, free lunches will remain free, semantics aside.