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Thursday, March 7, 2013

Fleischer: The Tax Benefits of Working in the Office Rather Than at Home

NY Times DealBookNew York Times DealBook:  The Benefits of Working in the Office, by Victor Fleischer (Colorado):

Yahoo’s chief executive, Marissa Mayer, inspired much debate and rebuke when she recently abolished Yahoo’s work-at-home policy. In academia, “working from home” is a treasured euphemism for heading home after your morning class to have lunch, read the newspaper and take a nap. I hate to see anything that would endanger this hallowed tradition.

But encouraging working at in the office makes sense, especially for a company like Yahoo. While some studies suggest that working from home can increase worker productivity, a different line of research shows that in knowledge-based industries, casual interaction among employees enhances creativity and innovation. ...

Ms. Mayer came to Yahoo from Google, which is famous for its extravagant benefits, including free food and snacks, on-site gyms, subsidized massages, concierge services, on-site doctors, free on-site haircuts and so on. ...

Some items, like free or subsidized dry-cleaning, are clearly taxable benefits for the employee. Other benefits, like an on-site gym, are permitted to be provided tax free by regulation. Still others, like free meals, are probably taxable, but may not always be reported as income, and are unlikely to become the target of an IRS crackdown. ...

Rather than requiring the IRS to ask whether fringe benefits are compensatory, the Treasury Department could write regulations directing the agency to exclude from income items and services — like meals, climbing walls or foosball — if those items are consumed in a work environment intended to increase collaboration. Services that merely substitute for otherwise nondeductible, everyday living expenses, like dry-cleaning, would remain taxable.

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