holding that the employer was not required to withhold or pay FICA and FUTA taxes in 1971 with respect to the free meals it furnished its employees because the employer could not have told from the relevant statutes and regulations that the free meals were “remuneration” and thus “wages”
How later courts described this case
- holding that the employer was not required to withhold or pay FICA and FUTA taxes in 1971 with respect to the free meals it furnished its employees because the employer could not have told from the relevant statutes and regulations that the free meals were “remuneration” and thus “wages”
Written by the judges who cited it.
The opinion
DAVIS, Judge,
concurring in the result:
Although there is a non-frivolous argument that, despite the stipulation of the facts, we should remand for a trial on the main issue of whether the meals constituted compensation or remuneration, I agree with the court that, since the parties have presented the matter on that stipulation and do not particularize any further facts to be developed, we can and should decide the question on the record now before us. However, I cannot join the court’s opinion on that issue 1 because, in my view, it ranges far too widely and gratuitously covers ground wholly unnecessary to the decision of this particular case. The court’s "excess” observations suggest that almost all free meals by hotels and restaurants, no matter what the circumstances, are excluded from "wages” under FICA and FUTA, and the opinion denigrates a long-standing regulation which includes such meals in "wages” once they are found to be compensation or remuneration. I think that, in all the circumstances, 2 it is a mistake to go so far beyond the *35 specific facts of this case, and therefore separate myself from the large segments of the court’s opinion which, in my view, constitute dicta.
My sole ground for concurring in the result is that, on the particular facts now before us, the meals were not compensation or remuneration to the employees (and accordingly, by its own terms, outside the coverage of Treasury Regulation §§ 31.3121(a)-l and 31.3306(b) — D- The facts which lead me to that conclusion are set forth in the "non-excess” portion of the court’s opinion and I need mention only the following: the small value of the meals even in 1971; the absence of any indication that the employees were getting more than that relatively low value; the employers’ own purposes in furnishing the meal; the relatively low percentage of the employees’ total remuneration which is involved. The regulation excludes from remuneration "facilities or privileges” "if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, good will, contentment, or efficiency of his employees.” The meals involved here fit well within that category. 3 True, the regulation goes on to except "ordinarily” meals or lodging furnished to restaurant or hotel employees, "since generally these items constitute an appreciable part of the total remuneration of such employees” (emphasis added). As I see it, the meals here fall within the exception permitted by the regulation’s meal exception itself. No more need or should be decided or said.
In accordance with the opinion of the court, a stipulation of the parties, and a memorandum report of the trial judge as to the amount due, it was ordered on July 13, 1979 that judgment for plaintiff be entered for $26,349.18.
I do join the segment of the court’s opinion dealing with the adequacy of the refund claim.
Including the parties’ complicated efforts, on the one hand, to terminate this case *35 without a court ruling, and, on the other, to turn it into a major ruling and precedent in this field of the law.
The IRS never made any effort to include the value of uniforms furnished to employees even though a union agreement seemed to value the daily worth of a uniform at $1.00 (the agreement provided for plaintiffs to pay that amount for each day they failed to furnish a uniform).