IRS Sniffs Around Food Perks For Silicon Valley Tech Workers
(CBS SF) — Everybody likes a free lunch, unless you’re the Internal Revenue Service. And what the IRS really doesn’t like is the cafeteria at the Googleplex, Twitterverse or any iteration in the tech world.
San Francisco tax attorney Steve Moskowitz says the IRS has been sniffing around the food perks for years.
“That has been around forever,” Moskowitz said. “The first time I was asked that question was in the early 70s.”
While the IRS is looking at it as a “taxable fringe benefit” — meaning the government needs to be paid for 30 percent of the fair market value — Moskowitz says it’s all in how tech companies package it.
“If the employer says “As part of your compensation, I’m going to give you a free meal,’ then you can get taxed and that’s been tried,” Moskowitz said. “However, if the employer under the Internal Revenue Code 119 says ‘I’m giving you this for my convenience and my benefit,’ then it’s not taxable — plain and simple.”
While lunch and snacks may be out of reach, other tech perks like gyms, yoga and child care might be fair game.
“Then we’re talking about the fair market value of what you’ve been given,” Moskowitz said. “Again, the big dividing line is — is this compensation, then it’s taxable, or is it for the convenience of the employer.”
To give an example, Moskowitz takes on the tax case of our KPIX 5 mic.
“This microphone you’re using, it’s not going to be taxed,” Moskowitz said. “It’s for the convenience of the employer to do the job. But on the other hand, if they said, ‘Look, you can use the microphone at home for karaoke’ that would be a different case,” he added. “That’s what the tax law is about, characterization.”
Moskowitz says to make any changes to the tax code, Congress would have to act.