Silicon Valley Cafeterias Whet Appetite of IRS

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Staffers at technology companies long have enjoyed free gourmet meals, courtesy of their employers -- it is part of the culture in much of Silicon Valley, encouraging both collaboration and longer work hours. The Internal Revenue Service, arguing that these freebies are a taxable fringe benefit, has given new attention to the issue in recent months during routine audits of some companies, tax lawyers said.

When employers haven't been withholding taxes related to the meals, the IRS increasingly has sought back taxes that can amount to 30% of the meals' fair-market value, the lawyers said. In another sign of a new focus on the issue, the IRS and Treasury Department included taxation of "employer-provided meals" in their annual list of top tax priorities for the fiscal year ending next June. The agencies said they intend to issue new "guidance" on the matter, but gave no specifics about timing or what the guidance would say.


Silicon Valley Cafeterias Whet Appetite of IRS