A lot of companies offer cool perks to attract top-notch employees, like free meals and laundry service. But the IRS is now taking a closer look at those perks, and is trying to decide whether they should be taxing those company-paid meals and childcare services. Because those freebies basically increase employee income without increasing the taxes they pay.
For example, the software company EverNote pays to have their employees’ apartments cleaned twice a month, and Google offers a free concierge service, and cafeterias that dish out free gourmet food. And the IRS is trying to decide whether to tax those freebies just like other workplace perks, like a company car. And it could mean a lot more tax payments. Because according to a recent USA Today study, employee benefits now account for 20 percent of total workplace compensation.
The companies say the perks simply allow employees to spend more time focusing on work, and less time worrying about their responsibilities at home. After all, if the boss pays for your home to be cleaned, or provides free on-site childcare service, you’ll have fewer “work-life balance” problems to worry about. And that makes employees more focused, more productive, and more loyal.
Of course, employees who get great perks aren’t happy with the idea of being taxed for benefits, that should be free. And some are worried that they’ll be taxed for perks they don’t even take advantage of! Like if your company offers free food, but you don’t eat it.
Some companies say it could mean they’ll have to start withholding more taxes from employee paychecks. Either that, or they’ll have to cut back on the perks, and pay workers more money to pay for their own food, house cleaning or childcare.