The US government is not happy with Silicon Valley's free lunch

Corporate perks are nothing new: Everything from free parking to corporate jets all exist, and for companies in Silicon Valley, corporate perks are a way of life to attract the best talent. Unfortunately, the government is not so happy about one aspect of the free offerings.

It is quite common to hear about the luxury services offered to employees by companies like Google or Facebook, and one of them is a free lunch. It's these free lunches that has the IRS perturbed as they feel that these meals should be taxed like other benefits as they are, in a way, income for the employees.

Here's the deal, if your company does not provide you free food, you have to go out and buy food. Nothing strange here, but if your company is giving you free food, the IRS sees that as a benefit that is providing you with additional income, since you are no longer buying food, and therefore, it should be taxed.

As with all things related to taxes, nothing is simple. For example, at some offices, lunches have to be provided as it is not feasible for employees to go off-site for food or they can't bring food to the office. An example of this are folks who work on an oil rig in the middle of the ocean, and these employees can enjoy their 'free' lunch without the worry of tax implications.

The IRS believes that this matter will likely be settled in the courts as they expect corporations to push back heavily against the idea that free lunches should be taxed as income. The government is not concerned about the 'free lunch' that is distributed at meetings as those are seen to be infrequent.

While we won't know officially if these lunches are a taxable event for some time, if they are found to be, this could represent a significant rise in cost for employees.

Source: WSJ | Image Credit: Shutterstock - Famous Golden Gate Bridge

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