Employer-provided cafeteria meals can qualify for both 100 percent deduction and income exclusion
✍ Scribed by Dennis-Escoffier, Shirley
- Publisher
- John Wiley and Sons
- Year
- 1998
- Tongue
- English
- Weight
- 60 KB
- Volume
- 10
- Category
- Article
- ISSN
- 1044-8136
No coin nor oath required. For personal study only.
✦ Synopsis
A lmost hidden in the massive IRS Restructuring and Reform Act of 1998 is a provision, added by Nevada congressmen at the 11th hour, that eases the requirements for employers to qualify for a 100 percent deduction for meals that also qualify for tax-free treatment for their employees. Although the measure was specifically designed to protect workers in the hospitality industry in Nevada, where it has long been common practice for hotels and casinos to provide free meals to their employees, it will affect not only the hospitality industry in general, but also other employers that provide free meals to their employees.
The deduction applies for the cost of meals provided to employees free of charge in an eating facility (such as a cafeteria) on the premises. Nevada lawmakers inserted language into the IRS reform bill after the IRS decided it was going to begin taxing the traditionally free employee meals. Under prior law, to obtain the full deduction (rather than just a 50 percent deduction) and still qualify as a taxfree benefit for employees, the meals had to be provided for the convenience of the employer to "substantially all" the employees. The new law lowers the "substantially all" threshold to 50 percent.