Companies like Google (GOOGL), Facebook (FB), and Twitter (TWTR) have offered free meals to their employees in lavish, gourmet cafeterias in an effort to promote collaboration and encourage longer work hours. However, the Internal Revenue Service argues that these free employer-provided meals are a taxable fringe benefit.
According to The Wall Street Journal, tax experts agree. There are a few exceptions, however, for workers and professions in which lunch breaks are not feasible based upon working conditions or location. Some lawyers maintain that corporate free-meal programs should exist in this domain and remain untaxed.
An employee-benefits attorney at Morgan, Lewis & Bockius in Washington, Mary B. Hevener, told the Journal: "Look at the time savings...If your employees are able to eat lunch and get back to their desks in 20 or 30 minutes, that's a big time savings...The food is a lot healthier in many cases. And maybe you don't want your employees running around in other eateries talking business."
There is potential for individual employees to be tapped to pay back taxes, but the IRS generally tries to collect from employers, who are the liable party. The issue is likely to be decided in the courts.