IRS Looking to Tax Silicon Valley Firms' Free Lunches

There may be no such thing as a free lunch that's not taxed by the IRS

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    NEWSLETTERS

    There's no such thing as a free lunch, even in the land of free lunches. Because, as multiple outlets reported Tuesday, the famous perks enjoyed by the well-paid workers of Silicon Valley may be subjected to stiff taxes from the federal government. Derek Shore reports.

    There's no such thing as a free lunch, even in the land of free lunches. Because, as multiple outlets reported Tuesday, the famous perks enjoyed by the well-paid workers of Silicon Valley may be subjected to stiff taxes from the federal government.

    The free lunches on offer at the campuses of Google, Twitter, Facebook and their ilk might be taxable benefits, the IRS says.

    "In the past you didn't have employers giving their employees free meals all day long so this is a whole new area for the IRS to clamp down on," said Cheri Michaelis, a tax attorney.

    The Wall Street Journal broke the story of the IRS informing the tech giants that company-provided meals are a "fringe benefit," and subject to a tax of up to 30 percent of the meals' "fair-market value." In other words, the IRS might be interested in taxing tech workers for that second helping of quinoa and kombucha.

    "We're so regulated and taxed enough as it is," said Ellen Blue, who works in the Silicon Valley area. "And if employers want to give their employees a benefit like that they should be allowed to."

    One Silicon Valley firm is already dealing with the tax by giving its employees a bonus to cover the bill, the WSJ reports. Others are bound to fight the food tax fight the old-fashioned way: in court.

    "Obviously they don't want to have to pay the extra tax," Michaelis said. "And they don't want to have their employees to pay tax on the free lunch they are providing, so they're going to fight the IRS on this."