Enjoying A Free Lunch? No Such Thing Says IRS As Agency Considers Taxing Employee Perks Doled Out By Companies | Weasel Zippers - Liar Liar!
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Enjoying A Free Lunch? No Such Thing Says IRS As Agency Considers Taxing Employee Perks Doled Out By Companies | Weasel Zippers

The Feds can start with the perks the Congress Critters get. The Senate Hair Care barbershop/salon ran a $401,000 in 2012 providing $20 cuts to senators, staff members and the public.

Via The Daily Mail

The Internal Revenue Service is considering a bold move to label perks like free lunch given to workers by companies as taxable.

The agency wonders if freebies like haircuts and gym memberships are a way to compensate the highly skilled rather than just a way to jumpstart productivity.

Companies say it would be a step too far that needlessly chips away most notably at the fruitfulness of industries in Silicon Valley that have become a driving force behind the American economy.

‘I clearly think it ought to be taxable income,’ University of Florida tax law professor Martin J. McMahon, Jr. told the Wall Street Journal.

After all, argue proponents of such a tax, workers at Silicon Valley firms like Google and Facebook receive free meals from famously fancy in-house eateries every day.

Some companies even go a step further by offering freebies like haircuts, car services, and child care.

Typical workaday folks can expect to pay for all these using their fully taxed wages, an argument at the heart of the agency’s reason for pondering the added tax.

‘I buy my lunch with after-tax dollars,’ McMahon told the WSJ. ‘And I have to pay taxes to support free meals for those Google employees.’

Google reportedly serves 50,000 meals per day in its 120 cafes worlwide.

On the flip side, and in addition to arguments that the tax agency is already hopelessly burdened, are complanies’ claims that the perks aren’t perks at all: they’re incentives.

In the eye of the law, free meals are permissable, for instance, if they are ‘noncompensatory’ and a ‘convenience to the employer.’

‘There are real benefits for knowledge workers in having unplanned, face to face interaction,’ tax law prof from the University of Colorado Victor Flescher told the WSJ.

In Silicon Valley, where collaboration is the key to innovation, employers say they facilitate by putting workers lunch rooms where the munch free gourmet food.

It’s also an environment where the less time employees are away from their desks, the more time they’re working on projects that benefit the company.

And according to at least one Silicon Valley tech start-up founder, those projects benefit Americans as a whole.

‘Our customers win [because] they get a higher quality product and then our shareholders win because they see our momentum in the market,’ Andy Byrne of CEO of Clari, a cloud computing company, told Fox News.

‘If the IRS wanted to stop the productivity of Silicon Valley and of the economic growth engine that this place is,’ he said, ‘then they can have at it.’

As the government grapples with whether or not they should tax the recipients for their free meals–or whether it’s even got the manpower to add the task to its ever-growing list of to-dos–Silicon Valley companies already know how they’ll respond.

Legal experts largely agree that tech companies eager to keep programmers and the like well-fed and hacking away will probably just report the meals as taxable income and pay workers more to make up the difference.

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