Are employee meals subject to tax?

Meals provided to employees are subject to retail sales tax and retailing B&O tax. The tax applies whether the employee is charged for the meal or not.

The amount subject to tax is either the actual charge to the employee (if reasonable) or if there is no charge to the employee, the cost of the ingredients. A “reasonable charge” means at least the cost of the ingredients in the meal.

A restaurant that does not maintain a record of employee meals may use an estimate to determine the meal count. The estimate should be based on the restaurant’s actual employee meal policy. For example, the restaurant’s policy may be to provide a meal to every employee working five hours or more.

Without a written policy, the following formula is used to determine meal count:

• Those employees working shifts up to five hours, one meal; and
• Employees working shifts of more than five hours, two meals.
  

References: RCW 82.04.040 and RCW 82.08.010; WAC 458-20-124; WAC 458-20-119