I checked awhile back and most software companies fail the convenience test. It is only allowed if the employee can't get food elsewhere (e.g. on an oil rig).
You can exclude the value of meals you furnish to an employee from the employee's wages if they meet the following tests.
They are furnished on your business premises.
They are furnished for your convenience.
This exclusion does not apply if you allow your employee to choose to receive additional pay instead of meals.
Whether you furnish meals for your convenience as an employer depends on all the facts and circumstances. You furnish the meals to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. This is true even if a law or an employment contract provides that the meals are furnished as pay. However, a written statement that the meals are furnished for your convenience is not sufficient.
You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met.
The meals are:
Furnished on the business premises of your employer, and
Meals an employer provides as a means of disguising additional compensation to an employee are not regarded as furnished for the convenience of the employer under section 119. The IRS considers a meal as furnished for the employer’s convenience only if the company provided it for a substantial noncompensatory business reason. An employer furnishes a meal for such a reason when providing it
So the employee is available for emergency calls during his or her meal period.
Because the employee must be restricted to a short meal period and could not be expected to eat elsewhere in such a short time.
Because the employee could not otherwise secure proper meals within a reasonable meal period, such as when there are not sufficient eating facilities nearby.Meals an employer provides as a means of disguising additional compensation to an employee are not regarded as furnished for the convenience of the employer under section 119. The IRS considers a meal as furnished for the employer’s convenience only if the company provided it for a substantial noncompensatory business reason. An employer furnishes a meal for such a reason when providing it
So the employee is available for emergency calls during his or her meal period.
Because the employee must be restricted to a short meal period and could not be expected to eat elsewhere in such a short time.
Because the employee could not otherwise secure proper meals within a reasonable meal period, such as when there are not sufficient eating facilities nearby.
In other words, if a company provides you with a free lunch, it probably is taxable income.
See http://www.irs.gov/publications/p15b/ar02.html
Exact text: Meals on Your Business Premises
You can exclude the value of meals you furnish to an employee from the employee's wages if they meet the following tests.
They are furnished on your business premises.
They are furnished for your convenience.
This exclusion does not apply if you allow your employee to choose to receive additional pay instead of meals.
Whether you furnish meals for your convenience as an employer depends on all the facts and circumstances. You furnish the meals to your employee for your convenience if you do this for a substantial business reason other than to provide the employee with additional pay. This is true even if a law or an employment contract provides that the meals are furnished as pay. However, a written statement that the meals are furnished for your convenience is not sufficient.
From http://www.irs.gov/publications/p525/ar02.html Meals and Lodging
You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met.
The meals are:
Furnished on the business premises of your employer, and
Furnished for the convenience of your employer.
Another source: http://www.journalofaccountancy.com/Issues/2000/Jun/TheHighC...
Meals an employer provides as a means of disguising additional compensation to an employee are not regarded as furnished for the convenience of the employer under section 119. The IRS considers a meal as furnished for the employer’s convenience only if the company provided it for a substantial noncompensatory business reason. An employer furnishes a meal for such a reason when providing it
So the employee is available for emergency calls during his or her meal period.
Because the employee must be restricted to a short meal period and could not be expected to eat elsewhere in such a short time.
Because the employee could not otherwise secure proper meals within a reasonable meal period, such as when there are not sufficient eating facilities nearby.Meals an employer provides as a means of disguising additional compensation to an employee are not regarded as furnished for the convenience of the employer under section 119. The IRS considers a meal as furnished for the employer’s convenience only if the company provided it for a substantial noncompensatory business reason. An employer furnishes a meal for such a reason when providing it
So the employee is available for emergency calls during his or her meal period.
Because the employee must be restricted to a short meal period and could not be expected to eat elsewhere in such a short time.
Because the employee could not otherwise secure proper meals within a reasonable meal period, such as when there are not sufficient eating facilities nearby.
In other words, if a company provides you with a free lunch, it probably is taxable income.