For a chart which shows which meals and entertainment are deductible, please click here.

In a Technical Advice Memorandum, the IRS evaluated whether meals and snacks that the taxpayer provided to employees at its headquarters were includible in the employees’ wages. The taxpayer provided:

(1) meals without charge to all employees, contractors, and visitors, without distinction as to the employee’s position, specific job duties, ongoing responsibilities, or other external circumstances; and

(2) unlimited snacks and drinks in designated snack areas that were available to employees, contractors, and escorted guests.

The IRS ruled that generally the value of meals the taxpayer provided to its employees was includible in the employees’ wages because the taxpayer failed to show that the meals were provided for substantial business reasons or for the employer’s convenience. However, it ruled that meals provided to employees on call to handle emergency outages were for a substantial business reason and were therefore excludable from income.

The IRS also concluded that the snacks the taxpayer provided in its designated snack areas were outside of the scope of Sec. 119 because they were not meals prepared for consumption at a meal time, and because quantifying the value of snacks consumed by each employee was administratively impractical, they were excludable from employees’ gross income as a de minimis fringe benefit.