Publication 15 B - Employer'S Tax Guide To Fringe Benefits

Employees available for emergency calls. Meals you

the value of meals you furnish on a day when the employee

furnish during working hours so an employee will be avail-

is not working. However, you can exclude these meals if

able for emergency calls during the meal period are fur-

they are furnished with lodging that is excluded from the

employee’s wages under the rules discussed under Lodg-

nished for your convenience. You must be able to show

ing on Your Business Premises, earlier.

that these emergency calls have occurred or can reasona-

bly be expected to occur.

Meals with a charge. The fact that you charge for the

meals and that your employees may accept or decline the

Example. A hospital maintains a cafeteria on its prem-

meals is not taken into account in determining whether

ises where all of its 230 employees may get meals at no

meals are furnished for your convenience.

charge during their working hours. The hospital furnishes

meals to have 120 employees available for emergencies.

S corporation shareholder-employee. For this exclu-

Each of these employees is at times called upon to perform

sion, do not treat a 2% shareholder of an S corporation as

services during the meal period. Although the hospital

an employee of the corporation. A 2% shareholder is

does not require these employees to remain on the prem-

someone who directly or indirectly owns (at any time dur-

ises, they rarely leave the hospital during their meal period.

ing the year) more than 2% of the corporation’s stock or

Since the hospital furnishes meals on its premises to its

stock with more than 2% of the voting power.

employees so that more than half of them are available for

emergency calls during meal periods, the hospital can

Moving Expense

exclude the value of these meals from the wages of all its

employees.

Reimbursements

Short meal periods. Meals you furnish during working

hours are furnished for your convenience if the nature of

This exclusion applies to any amount you give an em-

your business restricts an employee to a short meal period

ployee, directly or indirectly (including services furnished in

(such as 30 or 45 minutes) and the employee cannot be

kind), as a payment for, or a reimbursement of, moving

expected to eat elsewhere in such a short time. For exam-

expenses. You must make the reimbursements under

ple, meals can qualify for this treatment if your peak wor-

rules similar to those described in chapter 13 of Publication

kload occurs during the normal lunch hour. However, they

535 for reimbursements of expenses for travel, meals, and

do not qualify if the reason for the short meal period is to

entertainment under accountable plans.

allow the employee to leave earlier in the day.

This exclusion applies only to reimbursements of mov-

ing expenses that the employee could deduct if he or she

Example. Frank is a bank teller who works from 9 a.m.

had paid or incurred them without reimbursement. How-

to 5 p.m. The bank furnishes his lunch without charge in a

ever, it does not apply if the employee actually deducted

cafeteria the bank maintains on its premises. The bank

the expenses in a previous year.

furnishes these meals to Frank to limit his lunch period to

Deductible moving expenses include only the reasona-

30 minutes, since the bank’s peak workload occurs during

ble expenses of:

the normal lunch period. If Frank got his lunch elsewhere, it

would take him much longer than 30 minutes and the bank

1) Moving household goods and personal effects from

strictly enforces the time limit. The bank can exclude the

the former home to the new home, and

value of these meals from Frank’s wages.

2) Traveling (including lodging) from the former home to

Proper meals not otherwise available. Meals you fur-

the new home.

nish during working hours are furnished for your conve-

nience if the employee could not otherwise eat proper

Deductible moving expenses do not include any

meals within a reasonable period of time. For example,

expenses for meals.

meals can qualify for this treatment if there are insufficient

CAUTION

eating facilities near the place of employment.

Meals after work hours. Meals you furnish to an em-

For more information on deductible moving expenses,

ployee immediately after working hours are furnished for

see Publication 521, Moving Expenses.

your convenience if you would have furnished them during

Employee. For this exclusion, treat the following individu-

working hours for a substantial nonpay business reason

als as employees.

but, because of the work duties, they were not eaten during

working hours.

1) A current employee.

Meals you furnish to promote goodwill, boost mo-

2) A leased employee who has provided services to

rale, or attract prospective employees. Meals you fur-

you on a substantially full-time basis for at least a

nish to promote goodwill, boost morale, or attract

year if the services are performed under your pri-

prospective employees are not considered furnished for

mary direction or control.

your convenience. However, you may be able to exclude

their value under the rules discussed under De Minimis

Exception for S corporation shareholders. Do not

Meals, earlier.

treat a 2% shareholder of an S corporation as an employee

Meals furnished on nonworkdays or with lodging.

of the corporation. A 2% shareholder is someone who

You generally cannot exclude from an employee’s wages

directly or indirectly owns (at any time during the year)

Page 13

Publication 15 B - Employer'S Tax Guide To Fringe Benefits - 2002 Page 13

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