Is the value of meals provided to an employee on the employer's premises for the employer's convenience or benefit taxable income to the employee?
Author: Alice Gilman
No. Under +IRC § 119 and accompanying regulations, meals are furnished for the employer's convenience if the employer has a substantial noncompensatory business reason for providing meals to employees. Meals will be regarded as furnished for a substantial noncompensatory business reason if furnished under the following circumstances:
- Employees are provided with meals because they must remain available for emergencies during their meal periods. An employer must be able to prove that emergencies have occurred in the past or can reasonably be expected to occur in the future.
- Meals are provided to employees who are restricted to short meal periods and who could not be expected to eat elsewhere in such a short period of time.
- Meals are provided to employees who could not otherwise eat a proper meal in a reasonable amount of time.
- Meals are provided to food service employees during or immediately before or after their shifts.
- If meals are provided to more than one-half of employees for substantial noncompensatory business reasons, meals provided to the remainder of employees are also provided for substantial noncompensatory business reasons.
- Meals are provided to employees directly after their shifts, if the employer would have had a substantial noncompensatory business reason for providing meals during employees' working hours.
Meals provided as additional compensation or to promote morale or goodwill are not provided for substantial noncompensatory business reasons.