The rules for what is and is not deductible for businesses can be very tricky — and none more so than in the area of meals provided for your employees. Are those meals deductible for the employer? Are the meals considered income for the employee? Are the meals a fringe benefit of the employment? Can’t I just buy someone a sandwich without the IRS getting its nose in to it??
Unfortunately, the IRS has some very specific and confusing rules about meals provided for employees. I wish I could just tell you that one rule always applies without exception, that would make it so much easier. I can, though, try to give you a little guidance on what the IRS rules state.
The general rule is, “Meals that are excludable from an employee’s income under Code Section 119 are also considered a de minimis fringe benefit under Code Section 132”. So, usually what we need to do with our clients is to look at their specific situation to determine how to handle the cost of the meals.
Things that we need to look at are:
Are the meals provided for the convenience of the employer?
Where were the meals provided?
Did the employer impose a partial charge on the meal, or was it fully paid for?
Was the meal provided for business purposes?
A guideline that just came out recently had to do with airline employees. Catered meals provided by the employer for airline crew members to eat while they are performing flight duties which are prepared by an independent third party vendor at facility on the ground are not excludable from their gross incomes because they are not provided at an “eating facility”.
That does give a little guidance on what the IRS is looking for in terms of meals provided to employees, and the location of those meals. If you need some help with your specific situation, please give us a call.