IRS considers taxing work perks like food, gym memberships
foxnews.com
foxnews.com
It's just FUD clickbait, like a great many 'news' articles published at tax time. Consider the source.
So the market gravitates towards compensating employees in a tax-deductible sort of way.
Food at work makes work more efficient. It may be a perk, but it's less portable than getting paid the street value of whatever food is provided. You can't take it with you, or use that food to earn interest, nor can you get it if you're not at work. You don't get to pick what food gets served or how much it costs, nor can you refuse it in lieu of cash.
There are valid arguments for taxing perks, but it's a tricky issue.
"Even if the IRS does crack down on this perk, the high-tech lunch isn't likely to completely disappear. Legal experts suspect most companies will probably just report it as 'taxable income' to employees and then pay them more in salary to cover the cost."
Written by someone who has probably has little experience in the real world.
Accountant: So... for every employee we need to do an infinite sum series for a given taxable income based on the fair value of how much they have eaten...
Management: Ewwph. Huh?
Accountant: We don't even track this yet...
Management: We'll take what we pay on food and divide by the employees
Accountant: This would create a tragedy of the commons scenario that will destroy morale...
Management: Ewwph... how... we weigh each employee before and after they enter and exit the building AND restroom and find their weight differential. Then we apply that to a $/weight_delta factor to get their taxable income!!
Accountant: No ... Fuck no.
Management: Then how about we make employees pay for their meals and then reimburse afterwards like we do with our expense reports! So simple - literally just thought of that.
Accountant: Most sensical thing you said today, but accounting would collapse under the weight of all of those expense reports.
Management: Spoil sport. No more free lunches.
It's hard to believe it has taken them this long to realize that hundreds (or thousands) of dollars in free food and perks a month is compensation.
Benefit in Kind
And is taxed in some countries (to some extent) like Ireland and Germany
If your team decides to have an "offsite" at a restaurant/event, should that be taxed as well?
It just goes through a slippery slope that you view anything that a company provides as taxable. I think it would be a very short sighted decission to squeeze few dollars on the short term, for long term loss on overall productivity.
source? genuinely curious if those words are written somewhere.
It would seem to me that the IRS should tax income, specifically income that I can use to pay taxes (or which can reasonably and reliably be converted into something that I can use to pay taxes).
I'd love to send 40% of last week's corporate-paid lunch to the IRS but my guess is they wouldn't accept it.
IRS Publication 525 -- "In most cases, you must include in gross income everything you receive in payment for personal services. In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options."
It would seem to me that the IRS should tax income, specifically income that I can use to pay taxes (or which can reasonably and reliably be converted into something that I can use to pay taxes).
I'd love to send 40% of last week's corporate-paid lunch to the IRS but my guess is they wouldn't accept it.
You can't send the IRS 40% of a fully paid vacation to Hawaii, including use of the corporate jet either. Should companies be able to give their employees such vacations without out the employee being required to pay taxes on the value?
Think about what incentives that would create -- individuals could evade taxes altogether by simply negotiating with their employer to provide whatever goods and services they wished to consume rather than money. And because such benefits wouldn't make up part of the AGI the individual would also be eligible for government social programs.
I'm not sure how the IRS could possibly assign a compensation value to individuals. One method might be to make the costs of these perks non-deductible from a company tax perspective.
Free food is literally consumption, and falls within the umbrella of the tax. Heretofore, it has been ignored as de minimis, but the principle always applied. E.g. if companies could get away with giving non-cash compensation like cars on a non-taxable basis, they would.
It's a marginal cost per day/month, and frankly speaking, most of the people at the company can afford it.
Mostly it just means that the people at the top of the chain can no longer abuse the company purse to do what the f* they like, as used to happen in the 80s...
Im a right leaning, financial conservative libertarian, but gosh. I am impressed.
my 2c
Next up: Capital gains's different tax rate.