One key ingredient for an employer-provided meal program that does not generate employee income is business purpose. IRS guidance demonstrates the importance of substantiating business purpose with respect to employer-provided meals and snacks.
The IRS in a technical advice memorandum, TAM 201903017, addressed the section 1191 “convenience of the employer” exclusion for employer-provided meals. The IRS advised that the value of employer-provided meals is not excludable from employee income under section 119(a) unless the employer establishes and follows specific policies and procedures regarding the provision of the meals and there is a “substantial and non-compensatory business reason.”
The analysis and comments contained in TAM 201903017 provide valuable insight into the IRS position regarding the exclusion for employer-provided meals as well as with respect to recent changes made to the fringe benefit rules by the 2017 U.S. tax law (often referred to as the “Tax Cut and Jobs Act of 2017”).
Read an April 2019 report [PDF 111 KB] prepared by KPMG LLP: What’s News in Tax: No Soup for You! IRS Denies Tax-Favored Employer Provided Meals in Recent TAM
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