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  • Jillian K. Farrar

That Free Lunch May Be Taxable

The IRS recently released Technical Advice Memorandum 201903017 (the TAM) providing guidance to IRS personnel as to whether the value of meals and snacks provided without charge by an employer to its employees constitutes taxable wages. 


The employer in the TAM provided free meals to all employees, contractors and guests.  No distinction was made as to the employee’s position, job duties, responsibilities or other circumstances.  Unlimited drinks and snacks were also provided to all employees, contractors and visitors in unrestricted snack areas. 


The TAM concluded that the lack of policies justifying the employer’s need to provide meals to its employees could not support excluding the value of the meals from its employees’ wages.  The snacks, however, were not taxable due to the difficulty of quantifying portions and the low value of each snack. 


Employers should establish written policies that support the importance (i.e., convenience) of furnishing meals to employees, and employer’s belief in the importance of furnishing meals must be supported by the circumstances.  


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