IRS Plans To Tax Free Meals Silicon Valley Companies Dole Out to Employees

International Business Times ^ | 09/06/2014 | Zoe Mintz

[ChildOfThe60s]

“Taxman”

Let me tell you how it will be
There’s one for you, nineteen for me
Cos I’m the taxman, yeah, I’m the taxman

Should five per cent appear too small
Be thankful I don’t take it all
Cos I’m the taxman, yeah I’m the taxman

If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold I’ll tax the heat
If you take a walk, I’ll tax your feet

Taxman!
Cos I’m the taxman, yeah I’m the taxman

Don’t ask me what I want it for (Aahh Mr. Wilson)
If you don’t want to pay some more (Aahh Mr. Heath)
Cos I’m the taxman, yeah, I’m the taxman

Now my advice for those who die
Declare the pennies on your eyes
Cos I’m the taxman, yeah, I’m the taxman

And you’re working for no one but me
Taxman!

[gusopol3]

How about the food at Obama’s “home?” Wow , could they collect on state dinners packed with Obama’s cronies. The only reason most are invited is because they are employed by the federal government.

[xzins]

It isn’t subject to sales tax in Ohio, and while I would argue that food is part of the basis for the standard deduction received for each person, I’d have to go into the records and history to prove it, and I don’t have the energy at the moment.

However, in my opinion, a sales tax is the ultimate way to go. Food should not be taxed even then, in my opinion.

But, if the nation insists on keeping an income tax, then my position is that individuals should be treated like businesses....with expenses excluded from net income. That would include food, housing, transportation, insurances, etc.

[Gideon7]

This probably means that the free meals are going the way of the two martini lunch.

The famous 'three martini lunch' hoo hah first started with Jimmy Carter's 1976 presidential campaign. It caused a law change where only 50% of meals can be deducted - it doesn't matter if there is alcohol or not. Even if you are travelling it's still only 50%. And if you attempt to deduct the full amount anyway, the IRS can go after the employee and make them pay the tax on it. This has been true for a long time.

So I find it hard to believe that Silicon Valley isn't paying any taxes at all. The 50% rule has been in effect for a long, long time. And they aren't stupid enough to ignore something like that.

The IBD article is just plain misinformed. I mean, it shouldn't be a shock to anyone that the IRS wants its cut on employee meal expenses. That is basic tax law, and it's been that way for years and years. Granted, it is a 50% deduction, not 0% or 100%, but that fact should have been cited the article.

[Iron Munro]

They were instrumental in electing Obommie The Commie and wanted “Hope and Change” so this is their opportunity to pay “Their Fair Share”.

[Kickass Conservative]

When these Companies slash the Free Food Benefits, what will happen to all the Cafeteria Employees?

Must be why they’re pushing the $15 an Hour Fast Food Worker Salary.

From Google and Yahoo to McDonalds and Jack In The Box thanks to the IRS.

[RetiredTexasVet]

Technically the IRS should be taxing the free breakfasts, lunches and dinners given by school systems to students without regard to income tests. Should issue W-2s to the parents. If they are on food stamps, reduce the amount of food stamps by the amount of free meals furnished. If they are not on food stamps the parents must declare the amount as income.

[snappahead]

Internal Revenue Service....
TARGETING.

[mabarker1]

The frigging irs needs to just tax themselves out of existance- USELESS BASSTURDZ

[Gideon7]

the IRS states that the free meals will now be considered a taxable fringe benefit, the same way a company car or phone is.

An employer-provided cellphone is considered 'listed property' by the IRS. That means you must estimate the percentage of it that will be for business use (and document it). Then you can deduct that percentage. It has to be at least 50% or none of it is deductible.

Here's an example: Say you buy your employee a $500 iPhone. You declare it as listed property with 70% business use. Then the business can deduct 500*.7 = $350 off its taxes as a business expense (actually it's a depreciation allowance modulo Sec 179). During an IRS audit if the records show you over-reported the percentage, they can tax you on the difference and make you pay penalties.

So the article claiming that the IRS wants to consider cellphones 'a taxable fringe benefit' just doesn't make sense from what I understand. I am a small business owner who has been audited over precisely this kind of thing.

It's simply not how the tax law works for company-supplied laptops, tables, cellphones, and similar devices.

I think the article is dodgy.

[SoCal Pubbie]

I was going to post pretty much the same thing. Why aren’t free school lunches considered income?

[SeekAndFind]

RE: During an IRS audit if the records show you over-reported the percentage, they can tax you on the difference and make you pay penalties.

As an aside... why are we giving this agency the power to even audit that? What business is it of theirs how a phone is used up to this ridiculous detail?

Is this still a free country or what? Are we going to be doing business with an eye to make it profitable, or are we going to spend a lot of our time looking over our shoulder in anticipation of a government gotcha audit?

Giving them this power to snoop at tiny details like this is no different from giving the Nazi brown shirts the power to tell you what and what you can do with your property.

[Gideon7]

Didn’t the law change under Reagan so that public assistance benefits are taxable?

Or did the JEF use his pen to get rid of that one too, like he did Reaqgan’s 5-year lifetime limit on welfare benefits?

[ConstantSkeptic]

The IBD article is just plain misinformed. I mean, it shouldn't be a shock to anyone that the IRS wants its cut on employee meal expenses. That is basic tax law, and it's been that way for years and years. Granted, it is a 50% deduction, not 0% or 100%, but that fact should have been cited the article.

The whole article is poorly researched. The 34 page "2014-2015 Priority Guidance Plan" has exactly one line relating to this issue:

Guidance under §§119 and 132 regarding employer-provided meals.

That's it. One line. Translation by the popular press: "The sky is falling!"

[Amendment10]

With all due respect to mom & pop, please consider the following. As mentioned in related threads, as a consequence of the parents of Silicon Valley big-wigs, in this example, not making sure that their children were taught about the federal government's constitutionally limited powers as the Founding States had intended for those powers to be understood, the companies will probably find themselves in the following unhappy situation. They will be clueless with respect to being able to argue the following Supreme Court clarifications of Congress's limited power to lay taxes against the IRS's misguided, constitutionally indefensible plan to tax free meals.

• ”State inspection laws, health laws, and laws for regulating the internal commerce of a State, and those which respect turnpike roads, ferries, &c. are not within the power granted to Congress [emphases added].” —Gibbons v. Ogden, 1824.

• “Congress is not empowered to tax for those purposes which are within the exclusive province of the States.” —Justice John Marshall, Gibbons v. Ogden, 1824.

The reason that Congress has been wrongly overstepping its limited power to lay taxes is the following imo. Constitution-ignoring socialist FDR's activist judges basically swept the 10th Amendment under the carpet when they decided Wickard v. Filburn so that they could argue “finding new powers” for Congress in the Constitution's Commerce Clause, Clause 3 of Section 8 of Article I.

More specifically, wrongly ignoring the first Supreme Court excerpt above, and using terms like “some concept” and “implicit,” here is what was left of the 10th Amendment in Wickard v. Filburn after FDR's justices got finished with it.

“In discussion and decision, the point of reference, instead of being what was “necessary and proper” to the exercise by Congress of its granted power, was often some concept of sovereignty thought to be implicit [emphases added] in the status of statehood. Certain activities such as “production,” “manufacturing,” and “mining” were occasionally said to be within the province of state governments and beyond the power of Congress under the Commerce Clause.”—Wickard v. Filburn, 1942.

FDR’s thug justices had essentially reduced the 10th Amendment to a wives’ tale.

Again, the feds have no constitutional authority to tax intrastate corporate free lunches imo.

[sergeantdave]

“if the measure is put into effect, a free meal at Google estimated at $8 to $10 for an employee that eats two meals a day at the office could cost the company an extra $4,000 to $5,000 a year in taxes.”

Couldn’t happen to a more deserving bunch of left wing fascists. Eat it, Google. (Pun intended)

[OldMissileer]

so $20 /day x 5 days/ week x 50 wks/year = $10,000/ yr benefit, is going to net IRS $4-5000/ year according to this genius reporter. Under what rule could they tax the company anyway?

Gift tax at 50%?

[Secret Agent Man]

will they tax free school lunches doled out to everyone?

rhetorical, don’t answer...

[Captain Compassion]

How about children who get free meals at schools. Isn’t this a benefit to the parents who are saved from this expense? Why not tax them.

CC

[gusopol3]

My math was stupid anyway; at $100/ week, the most it’s worth to an employee is $5000/ year, so where the IRS is going to collect $5000 tax I don’t get.