Employees at Google, Facebook, and other Silicon Valley high-tech companies have long been able to take advantage of free or heavily discounted meals and snacks at company cafeterias. The idea is insidious but simple: don’t give workers excuses to leave the building–or their desks.
Now comes the IRS, possibly preparing to tell the tech world there really is no such thing as a free lunch.
That means the Service may be looking at whether those meals should be taxable fringe benefits, instead of the freebies that they currently are.
In general, employer-provided meals are untaxed if they are “for the convenience of the employer.” In this case, the issue may come down to how convenient it actually is for the employer to have employees eating in-house, vs. the convenience that employees get from not having to go out for lunch, or dinner, or anything else.
Does all this mean that the IRS might start going after the folks responsible for developing the latest cool apps and search codes? Probably not. It’d be a lot more efficient for the IRS to go after the employers themselves, charging them with failing to withhold taxes on unreported taxable fringe benefits.
Watch this space for more…or just Google the topic.