Employee meals provided occasionally, such as for holiday parties, are tax-free as a de minimis fringe benefit. For employer meals provided for business purposes to be tax free, they must be provided in an “eating facility.”

Note: The IRS believes snack areas and employee desks are not eating facilities.

For example, say that your staff meeting in the conference room runs late. You send out for sandwiches for everyone and pay for them. The cost of the sandwiches should be included in the attendees’ compensation and deducted by your company as salary expense.

What about the cost of snacks?

The IRS now says that unlimited employer-provided snacks are tax free as a de minimis fringe benefit under §132, Certain Fringe Benefits. Under §132, employers do not have to prove the snacks were provided as a condition of employment and for the convenience of the employer. Instead, the cost only has to be small enough that accounting for it is unreasonable and impractical.

But when is a “snack” a “meal”?

The IRS left this open-ended. While companies can probably offer more than coffee, soft drinks, popcorn and chips. However, if the snacks are of high value, are large portions or are offered too often, the IRS might conclude they are more like meals and so are not de minimis.

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