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Google Workers Owe Tax on Free Lunch?

By Andrew Lu on April 10, 2013 | Last updated on March 21, 2019

There may be no such thing as a tax-free lunch. Even when one of the best perks of working at high-tech companies like Google and Facebook may be that employees literally get a free lunch. However, that perk may lose some of its luster as the tax man may come after the workers.

Some tax experts say that these free lunches should be counted as taxable fringe benefits, reports the Huffington Post.

But does this mean that the individual employees now has to amend his taxes? Are the employees even individually responsible?

Fringe benefits like free meals should be considered as part of the employee's compensation package, says noted tax professor Martin McMahon of the University of Florida. So if a Google employee was paid $100,000 in salary and received $2,000 worth of free meals, Google should report to the IRS that the employee was paid $102,000 in compensation on which the employee would be taxed, reports the Huffington Post.

Companies like Google and Facebook provide free meals to workers partly to allow their employees to socialize and generate ideas, while also saving the company time by making it easy for the employees to remain on campus.

However, under tax law, these reasons for the "free" meal may not cut it. Instead, so long as a company allows workers to return home and bring their lunches from home, they cannot provide untaxed free meals to their workers. So employees like workers on a cruise ship who can't physically leave the ship may receive free meals, while tech workers who are free to come and go as they please would not be eligible for the free meals.

For their part, tech companies like Facebook say that they believe they are compliant with the law. In fact, a tax attorney said it was unlikely that individual workers at these companies would get dinged, reports the Huffington Post. Instead, it may just be an issue if the company as a whole is audited.

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