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Excluding employer‐provided meals
Author(s) -
DennisEscoffier Shirley
Publication year - 2019
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.22402
Subject(s) - memorandum , business , internal revenue , test (biology) , value (mathematics) , service (business) , marketing , revenue , public relations , accounting , law , paleontology , machine learning , political science , computer science , biology
In a recently issued Technical Advice Memorandum (TAM), the Internal Revenue Service concluded that the value of employer‐provided meals cannot be excluded from employee income under the “convenience of employer” test unless the employer establishes a “substantial noncompensatory business reason” for providing the meals. To qualify for exclusion, employers must show a clear link between that reason and the business need to provide the meals to employees as well as demonstrating that they are following and enforcing policies that require furnishing those meals. This article discusses the underlying tax authorities and the impact of the recently released TAM. Finally, recommendations are provided for employers who currently provide, or plan to provide, free meals to their employees on premises to ensure they preserve the tax‐free treatment of this employee benefit.