HOW WILL IT IMPACT YOU?

On December 22, 2017 the President signed the amended HR 1, the Tax Cuts and Jobs Act (“TCJA”) into law, which makes sweeping changes to the current tax system, and represents the most significant tax reform in over 30 years in the US.

TAX CHANGES FOR MEALS & ENTERTAINMENT

The TCJA contains a number of changes on the deductibility for tax purposes of certain meals and entertainment expenses.  As a result, many companies may face reduced tax deductions, and may also need to update their chart of accounts to properly account for the new limitations.  The following is a summary of some of the key changes:

From 100% deductible to 50% deductible (note: many become 100% non-deductible after 2025)

  • Meals provided on employers’ premises, including: overtime/weekend meals, meals provided to over half the employees for the convenience of the employer, etc.
  • Office snacks, including: coffee, water, soft drinks, other similar snacks and beverages.
  • Meals provided as part of sporting event package for charity

From 50% deductible to non-deductible

  • Entertainment related meals (meals when no business is conducted), which could include meals at sporting events, golf clubs, night clubs, bars, theaters, etc.
  • Sporting event tickets including transportation to and from and parking
  • Expenses incurred at membership clubs (note: club dues were always non-deductible)

100% deductible (no changes)

  • Office holiday party, summer outing/picnic
  • Transportation to/from restaurant for business meal
  • Meals included in taxable compensation to employee/contractor
  • Meals expenses reimbursed from customer/client
  • Food offered to public for free (e.g. for a conference/seminar)

50% deductible (no changes)

  • Client/customer business meals – business has to be conducted and taxpayer must be present
  • Meals in office during meetings
  • Travel meals
  • Meals for seminars, conferences, business league events

WHAT TO DO NEXT?

We are happy to discuss the impacts the TJCA may present for your organization. Please reach out to Joel Gardosik (617-620-9705, jgardosik@cfgi.com) or Mark Gauthier (978-273-8457, mgauthier@cfgi.com) if you have any questions.