Remember the three-martini lunch? For those of you who are younger or not political wonks, that phrase once described leisurely, expensive business meals. These lunches came to be seen as personal meals among friends that were paid for by taxpayers.
Capitol Hill put an end to many indulgent dining experiences, eventually cutting the business meals and entertainment tax deduction in most cases to 50 percent.
Now another type of lunch, the meals provided by companies to employees, is getting a closer tax look.
Cafeteria at the Google campus near Venice Beach. © LUCY NICHOLSON/Reuters/Corbis
IRS’ 2014-2015 tax plans
Every year, the U.S. Treasury and Internal Revenue Service make a list of tax matters they plan to consider. On page 7 of the 2014-2015 Priority Guidance Plan is a warning to businesses that Uncle Sam might change the tax rules for employer-provided meals.
Any changes likely won’t affect most companies. They only occasionally provide meals for their entire staff, and this rare company-underwritten dining is classified as de minimis, Latin for not enough for the IRS to worry about.
But the federal tax collector could concern himself with the regular free dining provided by large technology companies in California’s Silicon Valley.
Worker meals are business as usual
Google, Facebook, Twitter and other high-tech firms are famous for the worker perks they provide, from game rooms to gourmet meals.
Based on the latest guidance document, as well as reported recent audits of some companies where the employee lunch write-offs were reclassified as employee fringe benefits, this means the tax-free lunches soon could be over.
If the IRS issues regulations that clearly designate the meals as a taxable employee fringe benefit instead of just the price of being a good boss, one of two things could happen.
The companies could end the meals, or they could start including the value of the dining as income to workers.
Neither would make for happy workplaces.
Expect a food tax fight
If the meal tax rules are tightened, many tax watchers expect some companies to fight the change. Such interference in workplace culture would be another example of an over-reaching government, goes the business argument.
The other side, however, would likely note that these huge and hugely profitable private companies are getting taxpayer help at the same time Congress is trying to cut food and nutrition programs for lower-income individuals.
There’s no indication from Treasury or the IRS as to when the employer-provided meals issue might be addressed. But if you’re used to eating on the company dime, you might want to start making some brown-bag plans.
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Veteran contributing editor Kay Bell is the author of the book “The Truth About Paying Fewer Taxes” and co-author of the e-book “Future Millionaires’ Guidebook.”