IRS To Tech Companies: No More Free Lunch

Agency considers taxing employee perks

NEW YORK, NY - AUGUST 22: Healthy snack jars, in the 4th floor cafeteria at Google's headquarters in Manhattan, NY, on August 22, 2013.  (Photo by Yana Paskova/For The Washington Post via Getty Images)
Getty ImagesGoogle cafeteria: please don't take away our nuts.

The IRS wants to take away your sandwiches.

That's to say: if you work at a tech firm that serves free lunches, like Google or Facebook, the IRS is strongly considering taxing that and other employee perks. Think haircuts, free gym memberships, and anything else that could be construed as a means of pseudo-compensation.

"I clearly think it ought to be taxable income," University of Florida tax law professor Martin J. McMahon, Jr. told the Wall Street Journal. "I buy my lunch with after-tax dollars. And I have to pay taxes to support free meals for those Google employees."

Those famously elaborate Google cafeterias verge on Epcot-like food courts, with sushi bars, exotic condiments, and more noodle options than a street in Chinatown--all offered to employees at no charge.

> Find a tech job

The companies that would be affected by the new tax argue that perks like free lunch improve employee productivity, effectively reducing the time they spend away from their desks. This makes them incentives, rather than just perks--something that's much harder for the IRS to tax.

"Our customers win [because] they get a higher quality product, and then our shareholders win because they see our momentum in the market," Andy Byrne, CEO of tech company Clari, told Fox News. "If the IRS wanted to stop the productivity of Silicon Valley and of the economic growth engine that this place is, then they can have at it."

In the event that the IRS does crack down on employee perks, legal experts agree that companies will probably just report them as taxable income, and boost salaries to make up the difference. After all, as Byrne would have it, free pad Thai is the one thing between us and total economic collapse.

> Find a tax job

Add a Comment

*0 / 3000 Character Maximum


Filter by:

Is this a joke? The lunch is already taxed when the company purchase the lunches isn't it? Is it because the companies are writing them off when they report?

This sounds like a headache to police, do they mean to sign employees up to some sort of opt in program for free lunches and track it that way? Isn't it going to get a little awkward the way most tech companies offering these perks tend to work as teams? So a server just went down and you suddenly find yourself having to put out a fire but you can't grab a sandwich because you didn't opt in? I'm really curious as to how this works at all without the lunch ending up not being "Free" in the long run.

Not to mention it's usually the top employees that do exactly what these companies are strategically offering the free lunches for in the first place, quickly grab a bite while working through the lunch hour, making lunch hour more like 15 mins.

I think the companies are the ones to fight this battle, because these guys seem to be confused, free lunch doesn't just benefit the worker it benefits the company, that's why otherwise picky yuppie techies will rather devour whatever pig slop you cater that day as opposed to going out and spending $8 on something they actually like.

So unless companies plan on opening full fledged restaurants with menus, you can count on much less people sitting in front of their computers eating something they didn't choose but have to pay taxes on, in what world does someone willingly do that?
Someone needs to call in a psychologist for the tax man because they don't seem to take into account people's behavior when they start waving around the calculator.

September 02 2014 at 8:08 PM Report abuse rate up rate down Reply

Hey! The governmentt (aka IRS, etc) has t o collect lots of money in order to fuel Air Force One so obama can continue his vacations.

May 28 2014 at 9:14 AM Report abuse rate up rate down Reply
Ken Lavallee

Hey uncle sam, you wanna start taxing the free lunches given away at soup kitchens?
F***ing crazy.

I make minimum wage, at a part-time job (I CANT AFFORD OSAMA CARE), can barely pay my car insurance and gas to get to my dead end job, and I'm not even eligible for food stamps. ha, BUT WHILE I'M HARD AT WORK, SCRUBBING TOILETS AND DOING EVERYTHING UNDER THE EFFING SUN THAT ISNT EVEN IN MY JOB DESCRIPTION, I'M GIVING MY HARD-EARNED TAX DOLLARS TO SCUMMMMMMMMMMM!

It sickens me. But what's even worse is the amount of RN's and CNA's who ALSO come in and buy their subs and salads for lunch with food stamps, while my only pleasure is a bottle of water and a ciggeratte.

May 26 2014 at 7:07 PM Report abuse +1 rate up rate down Reply

Why doesn't the IRS also tax people who fly business and first class on the company dime?

April 18 2014 at 2:16 PM Report abuse rate up rate down Reply
1 reply to bert1118's comment

Free lunches for school kids should probably be taxed too! Let's keep this ball rolling Uncle Sam!

September 02 2014 at 8:12 PM Report abuse rate up rate down Reply

I can't believe all the stupid comments that are made here. The lowest paid people that protect our country(Enlisted Military) and some imbecile wonders if maybe they to should be taxed for their food??? Have you people taken a leave of your senses???? Enough of the stupid comments already people. You are talking opposite ends of the pay scale, techies to enlisted military. no comparisn at all. Gold nuggets to sand grains.

April 18 2014 at 5:18 AM Report abuse rate up rate down Reply

I think we should give IRS employees free lunches and free gym memberships. They do a terrific thankless job.

April 18 2014 at 5:16 AM Report abuse rate up rate down Reply

Martin J. McMahon, Jr. are you kidding or are you that retarded? That lunch money comes out of all the ads that are posted on google response. When you type a question into google and get the answer at the top where it says News, Shopping, Maps, and Books how do you think those items get on there? The companies pay google to put it on there, ie that is where the money comes from for the lunches! God and you teach law? Oh I see it is University of Florida no wonder all your athletes graduate if they all are as dumb as a stump like yourself.

April 18 2014 at 4:15 AM Report abuse rate up rate down Reply
1 reply to pagebassman's comment

Great post........I wonder if he can read though.

April 18 2014 at 4:56 AM Report abuse rate up rate down Reply

Instead of trying to tax honest working people why doesn't the IRS concentrate more on catching the crooks that get away with $Billions every year in Illegal income tax returns ? Oh , I get it, they would have to actually work to catch the crooks !

April 18 2014 at 4:00 AM Report abuse +1 rate up rate down Reply

It is very sad that the IRS is trying to nickel & dime the middle class to death. I am all for paying some taxes. Yes, Not all tax is bad. We do need an army, streets and bridges to drive on, police and it costs money. But not all tax breaks are good for the economy & some tax hikes are going to impead productivity. Taxing free lunch is crazy. It appears that they go after working people since they have less opportunity to hide their money & dont have the resources to hire sleazy accountants to find loopholes. Actually, the super- rich pay for lobiest to create loopholes in congress. Both democrats & Republicans take the cash from the lobiest. wonder if they get taxed on that? You know congressmen are not allowed to be persecuted from insider trading, i wonder why? oh they make the laws. why not give a tax break to only large companies that ACTUALLY hire more people than fire? Instead they have fake home offices in tax havens like Monte Carlo or Sweden yet wave the American flag like they are actually American companies. Why not go after unpatriotic buisnesses that get rich off fraudulent contracts & price gouging of military? I think the IRS should actually give the company a tax writeoff for giving an employee free lunches. At least that is a positive reenforcement opportunity that would benefit the USA. Nope instead the coporations complain that taxes are too high, but very few large coorps pay anything close to the 35% corporate tax.Many of the largest buisnesses pay less than 10% since they hide cash overseas or pretend they lose. But the IRS would rather go after middle class workers for a crappy 10 $ lunch.

April 18 2014 at 3:59 AM Report abuse rate up rate down Reply
1 reply to nicholaspsyr's comment

April 18 2014 at 4:19 AM Report abuse rate up rate down Reply

If they need money that bad go with the pole tax that Chicago has.

April 18 2014 at 3:30 AM Report abuse rate up rate down Reply

Search Articles

Picks From the Web