There sometimes IS a free lunch, but there NEVER is an untaxed lunch.
Many employers, especially those in the high-tech, digital, social media and other “young industries,” have begun providing their employees with free lunches. They include Apple, Google, Facebook and Twitter.
It is said that the impetus behind this growing practice is the hope that it will (a) foster collegiality, (b) make it less likely employees will discuss “business secrets” in public places, and (c) by catering in-house, make the 20-minute lunch more common.
But hold on a minute . . . the Internal Revenue Code provides that employer-provided meals are taxable fringe benefit, just as are the free use of a company car and life insurance over a certain threshold. But so far, no one has been footing the necessary tax bill. Not yet.
Just last week the IRS and the U.S. Treasury Department announced that the taxation of employer-provided meals is a top priority for its auditing staff for this year.
Since employers are responsible for withholding taxes from employees’ paychecks, and few if any have done so for meals they have provided, it is expected that employers, not employees, will be asked to pay up for the unpaid taxes, applicable interest and imposed tax penalties. However, it is expected that employers will in coming years add meals into their calculations of employee income in coming years.
Seems ironic, at the least, that the IRS Is focusing its efforts on employee lunches, and raising no voice of concern about the fact that those very same companies are avoiding billions of dollars in taxes by incorporating themselves overseas, and by leaving their overseas profits overseas and not sending them to the U.S., and taking advantage of other tax loopholes.
Ironic, at the least. Perhaps it is that employee lunches have no high-paid lobbyists, don’t throw money at Congressional campaigns, and simply take care of basic human needs.
© 2014 Alan L. Sklover. All Rights Reserved.