Brief: IRS meals tax rules held up

Friday, Oct. 30, 1998 | 4:03 a.m.

The Internal Revenue Service will delay issuing its planned meal-tax rules.

The IRS said it needs more time to consider comments it has received since announcing its proposed meal-tax regulations.

The IRS proposed the rules after Congress passed legislation this year exempting most hotel-casino workers from paying taxes on free meals provided by their employers.

Under the new law, resorts can offer untaxed free meals to all employees if half their employees are food servers or gaming dealers.

The bill was drafted to circumvent a 1997 U.S. Tax Court decision involving Boyd Gaming that found that free meals were a form of income that could be taxed. It also found meals provided to non-essential employees could not be deducted as expenses in order to reduce taxes.

Critics have charged the IRS tried to make it hard for resorts to take advantage of the new law by requiring them to justify the free meals on a meal-by-meal and employee-by-employee basis.

The IRS said its proposed regulations will not become effective Saturday, as previously planned.

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