Hotel workers launch postcard drive over meal taxes

Brian Seals

Wednesday, May 20, 1998 | 10:27 a.m.

If the hotel-casino workers' battle with the Internal Revenue Service over taxing employee meals were nothing more than a public relations battle, there would be little for the workers to worry about.

But it's not just a public relations battle, it is one that will play out either in Congress or in federal court.

With that in mind the Culinary Union Local 226, aided by several hotel-casinos, is staging a postcard drive this week to give Congress the workers' voice on the matter. The effort was launched Tuesday at Caesars Palace.

"We're hoping that over the next four days we can generate tens of thousands of postcards to Congress asking them to overturn the IRS meals tax," said Glen Arnodo, political action director for the union.

A Sept. 30 U.S. Tax Court ruling agreed with the IRS' contention that free lunches to Boyd Gaming Corp. employees should be taxed as income. That paved the way for the IRS to enforce the meals-as-income policy against all hotel-casinos. Casinos have long given employees free meals while the employees are working.

The IRS didn't just target workers. It also hurt casinos by ruling meals given to non-essential employees -- those not required to stay on site during meal breaks -- could not written of against taxes as expenses.

That ruling is being appealed, but the appeal could take years. A legislative solution is proposed in both houses of Congress by the four members of Nevada's congressional delegation.

It's the latter avenue the Culinary Union wants to expedite in its postcard campaign.

"We're a little more optimistic than we were a month ago," said Betty Wilson, vice president of taxes at Caesars and head of the American Gaming Association's task force on taxation.

Time is of the essence. Arnodo and Wilson said the IRS is likely to enforce the policy beginning this summer, possibly by July 1. For the casinos, that leaves little time to implement systems to account for the change. For workers, it will be a financial burden with estimates that one free meal per day would translate into about $300 in income a year.

"With what they take out of my wages for federal income tax already, I just hate to see it hit any harder," said Griffeth Johnson, who works in engineering at Caesars.

And aside to cost to employees, there is also inconvenience. A worker on the Strip would be hard-pressed to leave the hotel property and get a meal within the allotted break time.

"It would be pretty much impossible," Johnson said.

What amount of revenue the policy means to the IRS has yet to be determined.

The higher the revenue estimation, the lesser the chance of the measure passing, Wilson said.

IRS spokeswoman Jody Patterson said the agency would be issuing guidelines "soon," but would not verify whether the policy would be enforced beginning July 1.

"We'll give the industry adequate time before it becomes final," Patterson said.