The IRS is debating whether workers at technology companies such as Google, Facebook, Zynga and Twitter should have to pay tax on free benefits provided by their employers.
It is well known that these firms treat their employees incredibly well, providing them with free gourmet lunches and free shuttle buses to work, among other benefits. Such benefits - which are currently considered non-compensatory, and therefore non taxable - are aimed at attracting the best in the business to these companies, and keeping them there.
Sanjeey Agrawal, Head of Product Marketing at Google from 2003 to 2005 said these benefits ‘should not be taxed’ as they’re ‘a phenomenal convenience, a terrific motivator and a great social thing’, which gives employees a great way to meet and discuss ideas, encourages ‘team building’ and allows employees to ‘share a real sense of belonging to a place.’ However, some experts say that they are ‘dodging the rules’, and that essentially taxpayers are unfairly underwriting benefits for these companies employees.
Annette Nellen, an accounting and taxation professor at San Jose State anticipates that ‘if these companies see the IRS seriously considering looking at this, they may take a closer look at themselves and start to change their own practices.’