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2018 Tax Reform Series: Tax Law Changes to Employee Fringe Benefits

Below is the second article in our series covering the employee benefits-related changes contained in the Tax Cuts and Jobs Act signed by the President on December 22, 2017.

On-Premises Fringe Benefits, Part II: Is There Such a Thing as a Free Lunch?

In part one of this two-part series, “On-Premises Fringe Benefits, Part I: Is There Such a Thing as a Free Lunch?,” I discussed the Internal Revenue Code’s provisions on tax-free employer-provided meals in addition to the code’s “convenience of the employer” test. In this part, I will discuss a pivotal case on free lunches: Boyd Gaming Corporation v. Commissioner of Internal Revenue and the income exclusion for certain employee meals provided at a company cafeteria.

IRS Announces Impending Tighter Enforcement of Employer-Provided Meals, Fringe Benefits

Internal Revenue Code § 119 allows employers to deduct 100% of the value of meals provided to employees when they are for the convenience of the employer, and they are furnished on the business premises of the employer. Meals provided for “the convenience of the employer” are also excludable from the employee’s taxable income. However, last month, the IRS announced that it plans to change that interpretation, which will have significant implications for both tax and wage and hour liability. The IRS announced as part of its Priorities Guidance Plan that it plans to issue new guidance regarding employer-provided meals, which we can assume is not a positive development for employers. The Wall Street Journal reported that IRS auditors have already started “flagging the issue and demanding back taxes from companies amounting to 30% of the meals’ fair market value.”

IRS Reminds Employers Value of Free Parking May Be Taxable Fringe Benefit

A recent Information Letter issued by the Internal Revenue Service (IRS) on the taxation of employer-provided parking, although noncontroversial, serves as a useful reminder that free parking for employees may result in taxes for both the employee and the employer. IRS Information Letter 2014-0017 (June 27, 2014) explains that if an employer provides a free benefit to employees for qualified parking the value of which exceeds the maximum amount that may be excluded from an employee's income per month, the value of the benefit exceeding the exclusion limit is included in the employee's wages for income and employment tax purposes.

Is Your Business Ready for Wellness? (pdf)

How can companies handle skyrocketing health care costs without cutting benefits to employees?
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