One could pitch the devolution of coffee-producing labor to someone making a tiny fraction of what the average Google employee makes as primarily for the benefit of the employer—it gets the employee back to their desk more quickly. That makes it less likely to be seen as “disguised compensation.” Presumably your hypothetical $1 coffee solution was DIY?
In practice people would wait in line for the barista, sometimes for quite a while, and the baristas weren’t much faster than doing it yourself, so the time argument seems to point the other way?
Did a little updating: the tax treatment of employee meals on-site is a bit different than other perks, with some changes since I took tax. They are in some circumstances not tax-deductible as a business expense by the employer or taxable to the employee, so the IRS gets its fill a different way where the employer is not exempt from income taxation. E.g., this discussion of a 2019 IRS technical advice memorandum or TAM (also this). So going back to your hypo, if that is the tax treatment in a particular situation, there may not be a tax advantage depending on whether the employer is a 501(c)(3).
Traditionally, coffee and doughnuts are excludable as de minimis fringe benefits, but as the first linked article explains the reason for that is that the value of each snack event is small and accounting for the benefit is impractical. I’m not sure that would hold for a barista-run coffee shop where the employer could scan the employee’s badge and track usage that way. A study of the 50-page TAM opining on one employer’s on-campus dining might help but doesn’t seem very high-value.
In practice people would wait in line for the barista, sometimes for quite a while, and the baristas weren’t much faster than doing it yourself, so the time argument seems to point the other way?
Sounds like they should have hired more baristas.
Did a little updating: the tax treatment of employee meals on-site is a bit different than other perks, with some changes since I took tax. They are in some circumstances not tax-deductible as a business expense by the employer or taxable to the employee, so the IRS gets its fill a different way where the employer is not exempt from income taxation. E.g., this discussion of a 2019 IRS technical advice memorandum or TAM (also this). So going back to your hypo, if that is the tax treatment in a particular situation, there may not be a tax advantage depending on whether the employer is a 501(c)(3).
Traditionally, coffee and doughnuts are excludable as de minimis fringe benefits, but as the first linked article explains the reason for that is that the value of each snack event is small and accounting for the benefit is impractical. I’m not sure that would hold for a barista-run coffee shop where the employer could scan the employee’s badge and track usage that way. A study of the 50-page TAM opining on one employer’s on-campus dining might help but doesn’t seem very high-value.