§119 — Title 26 Internal Revenue Code | U.S. Code

Summary

You do not have to count as taxable pay the value of meals or housing your employer gives you, your spouse, or your dependents when the employer provides them for the employer’s business needs. Meals qualify only if they are provided on the employer’s business site. Housing qualifies only if you must live there as a job requirement and it is on the employer’s business site. Whether a contract or state law says otherwise does not decide if the benefit is pay. Charging for meals or letting workers accept or refuse meals does not change the rule. If an employee must pay a fixed periodic charge for employer-provided meals, the exclusion still applies whether that money comes from pay or the employee’s own funds, but only if the charge is required even if the employee declines the meals. If more than half the employees who get meals on the premises receive them for the employer’s needs, then all those meals are treated as for the employer’s needs. A foreign work camp counts as the employer’s business site if it’s needed because housing isn’t available nearby, is placed near the work site, is in a private area not open to the public, and usually houses 10 or more workers. Employees of an educational institution can exclude campus housing that meets the rules for “qualified campus lodging,” but the exclusion does not apply to the amount that is more than the lesser of (i) 5 percent of the lodging’s appraised value or (ii) the average rent paid that year by nonemployees for similar housing, minus the rent the employee pays. “Qualified campus lodging” means campus or nearby housing given as a residence. “Educational institution” means an institution described in section 170(b)(1)(A)(ii) (or an entity of such public institutions) or an academic health center. An “academic health center” must meet three conditions in the law, including receiving certain graduate medical education payments and having its own faculty who teach and do medical research.

Title 26, §119

Internal Revenue Code — Source: USLM XML via OLRC

(a)There shall be excluded from gross income of an employee the value of any meals or lodging furnished to him, his spouse, or any of his dependents by or on behalf of his employer for the convenience of the employer, but only if—

(1)in the case of meals, the meals are furnished on the business premises of the employer, or

(2)in the case of lodging, the employee is required to accept such lodging on the business premises of his employer as a condition of his employment.

(b)For purposes of subsection (a)—

(1)In determining whether meals or lodging are furnished for the convenience of the employer, the provisions of an employment contract or of a State statute fixing terms of employment shall not be determinative of whether the meals or lodging are intended as compensation.

(2)In determining whether meals are furnished for the convenience of the employer, the fact that a charge is made for such meals, and the fact that the employee may accept or decline such meals, shall not be taken into account.

(3)(A)If—

(i)an employee is required to pay on a periodic basis a fixed charge for his meals, and

(ii)such meals are furnished by the employer for the convenience of the employer,

(B)Subparagraph (A) shall apply—

(i)whether the employee pays the fixed charge out of his stated compensation or out of his own funds, and

(ii)only if the employee is required to make the payment whether he accepts or declines the meals.

(4)All meals furnished on the business premises of an employer to such employer’s employees shall be treated as furnished for the convenience of the employer if, without regard to this paragraph, more than half of the employees to whom such meals are furnished on such premises are furnished such meals for the convenience of the employer.

(c)(1)In the case of an individual who is furnished lodging in a camp located in a foreign country by or on behalf of his employer, such camp shall be considered to be part of the business premises of the employer.

(2)For purposes of this section, a camp constitutes lodging which is—

(A)provided by or on behalf of the employer for the convenience of the employer because the place at which such individual renders services is in a remote area where satisfactory housing is not available on the open market,

(B)located, as near as practicable, in the vicinity of the place at which such individual renders services, and

(C)furnished in a common area (or enclave) which is not available to the public and which normally accommodates 10 or more employees.

(d)(1)In the case of an employee of an educational institution, gross income shall not include the value of qualified campus lodging furnished to such employee during the taxable year.

(2)Paragraph (1) shall not apply to the extent of the excess of—

(A)the lesser of—

(i)5 percent of the appraised value of the qualified campus lodging, or

(ii)the average of the rentals paid by individuals (other than employees or students of the educational institution) during such calendar year for lodging provided by the educational institution which is comparable to the qualified campus lodging provided to the employee, over

(B)the rent paid by the employee for the qualified campus lodging during such calendar year.

(3)For purposes of this subsection, the term “qualified campus lodging” means lodging to which subsection (a) does not apply and which is—

(A)located on, or in the proximity of, a campus of the educational institution, and

(B)furnished to the employee, his spouse, and any of his dependents by or on behalf of such institution for use as a residence.

(4)For purposes of this subsection—

(A)The term “educational institution” means—

(i)an institution described in section 170(b)(1)(A)(ii) (or an entity organized under State law and composed of public institutions so described), or

(ii)an academic health center.

(B)For purposes of subparagraph (A), the term “academic health center” means an entity—

(i)which is described in section 170(b)(1)(A)(iii),

(ii)which receives (during the calendar year in which the taxable year of the taxpayer begins) payments under subsection (d)(5)(B) or (h) of section 1886 of the Social Security Act (relating to graduate medical education), and

(iii)which has as one of its principal purposes or functions the providing and teaching of basic and clinical medical science and research with the entity’s own faculty.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 1886(d)(5)(B) or (h) of the Social Security Act, referred to in subsec. (d)(4)(B)(ii), is classified to section 1395ww(d)(5)(B) or (h) of Title 42, The Public Health and Welfare.

Amendments

1998—Subsec. (b)(4). Pub. L. 105–206 added par. (4). 1996—Subsec. (d)(4). Pub. L. 104–188 amended par. (4) generally. Prior to amendment, par. (4) read as follows: “Educational institution.—For purposes of this paragraph, the term ‘educational institution’ means an institution described in section 170(b)(1)(A)(ii).” 1988—Subsec. (d). Pub. L. 100–647 struck out “(as of the close of the calendar year in which the taxable year begins)” after “appraised value” in par. (2)(A)(i) and inserted at end “The appraised value under subparagraph (A)(i) shall be determined as of the close of the calendar year in which the taxable year begins, or, in the case of a rental period not greater than 1 year, at any time during the calendar year in which such period begins.” as concluding provision. 1986—Subsec. (d). Pub. L. 99–514 added subsec. (d). 1981—Subsec. (c). Pub. L. 97–34 added subsec. (c). 1980—Subsec. (a). Pub. L. 96–222 struck out “General rule” in subsec. (a) as in effect on the day before the date of enactment of the Foreign Earned Income Act of 1978 to correct a legislative oversight in the amendment of subsec. (a) of this section by section 205 of Pub. L. 95–615. The amendment by Pub. L. 95–615, however, was executed without reference to “General rule” as the probable intent of Congress, thereby requiring no change in text. 1978—Subsec. (a). Pub. L. 95–615 designated existing provisions as subsec. (a), added subsec. (a) heading, and substituted “furnished to him, his spouse, or any of his dependents by or on behalf of his employer for the convenience of the employer” for “furnished to him by his employer for the convenience of the employer”. Pub. L. 95–427 inserted provisions relating to factors not taken into account with respect to meals and certain fixed charges for meals.

Statutory Notes and Related Subsidiaries

Effective Date

of 1998 Amendment Pub. L. 105–206, title v, § 5002(b),

July 22, 1998, 112 Stat. 789, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning before, on, or after the date of the enactment of this Act [

July 22, 1998].”

Effective Date

of 1996 Amendment Pub. L. 104–188, title I, § 1123(b), Aug. 20, 1996, 110 Stat. 1768, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 1995.”

Effective Date

of 1988 AmendmentAmendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.

Effective Date

of 1986 Amendment Pub. L. 99–514, title XI, § 1164(b), Oct. 22, 1986, 100 Stat. 2511, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1985.”

Effective Date

of 1981 AmendmentAmendment by Pub. L. 97–34 applicable with respect to taxable years beginning after Dec. 31, 1981, see section 115 of Pub. L. 97–34, set out as a note under section 911 of this title.

Effective Date

of 1980 AmendmentAmendment by Pub. L. 96–222 effective as if included in the Foreign Earned Income Act of 1978, Pub. L. 95–615, see section 108(a)(2)(A) of Pub. L. 96–222, set out as a note under section 3 of this title.

Effective Date

of 1978 Amendment Pub. L. 95–427, § 4(b), Oct. 7, 1978, 92 Stat. 998, provided that: “The amendment made by subsection (a) [amending this section] shall apply with respect to taxable years beginning after

December 31, 1953, and ending after

August 16, 1954.”

Effective Date

of 1978 Amendment; Election of Prior LawAmendment by Pub. L. 95–615 applicable to taxable years beginning after Dec. 31, 1977, with provision for election of prior law, see section 209 of Pub. L. 95–615, set out as a note under section 911 of this title. Statute of Limitations Pub. L. 96–605, title I, § 107(b), Dec. 28, 1980, 94 Stat. 3524, provided that: “In the case of any allowance received during calendar year 1974, 1975, 1976, or 1977, subsections (a)(2) and (e) of such section 3 [section 3 of Pub. L. 95–427, set out below] shall be applied by substituting the date one year after the date of the enactment of this Act [Dec. 28, 1980] for ‘

April 15, 1979’ each place it appears.” Treatment of Certain Statutory Subsistence Allowances or Subsistence Allowances Negotiated in Accordance With State Law Received by State Police Officers Before

January 1, 1978 Pub. L. 95–427, § 3, Oct. 7, 1978, 92 Stat. 996, as amended by Pub. L. 96–605, title I, § 107(a), Dec. 28, 1980, 94 Stat. 3524; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(a) General Rule.—If—“(1) an individual who was employed as a State police officer received a statutory subsistence allowance or a subsistence allowance negotiated in accordance with State law while so employed, “(2) such individual elects, on or before

April 15, 1979, and in such manner and form as the Secretary of the Treasury may prescribe, to have this section apply to such allowance, and “(3) this section applies to such allowance, then, for purposes of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], such allowance shall not be included in such individual’s gross income. “(b) Allowances to Which Section Applies.—For purposes of this section, this section applies to any statutory subsistence allowance or subsistence allowance negotiated in accordance with State law which was received—“(1) after

December 31, 1969, and before

January 1, 1974, to the extent such individual did not include such allowance in gross income on his income tax return for the taxable year in which such allowance was received, or “(2) during the calendar year 1974, 1975, 1976, or 1977. “(c) Other Definitions.—For purposes of this section—“(1) State police officer.—The term ‘State police officer’ means any police officer (including a highway patrolman) employed by a State (or the District of Columbia) on a full-time basis with the power to arrest. “(2) Income tax return.—The term ‘income tax return’ means the return of the taxes imposed by subtitle A of the Internal Revenue Code of 1986. If an individual filed before

November 29, 1977, an amended return for any taxable year, such amended return shall be treated as the return for such taxable year. “(d) Limitation on Deduction.—If any individual receives a subsistence allowance which is excluded from gross income under subsection (a), no deduction shall be allowed under any provision of chapter 1 of the Internal Revenue Code of 1986 for expenses in respect of which he has received such allowance, except to the extent that such expenses exceed the amount excludable from gross income under subsection (a) and the excess is otherwise allowed as a deduction under such chapter 1. “(e) Statute of Limitations.—If refund or credit of any overpayment of tax resulting from the application of this section is prevented at any time on or before

April 15, 1979, by the operation of any law or rule of law (including res judicata), refund or credit of such overpayment (to the extent attributable to the application of this section) may, nevertheless, be made or allowed if claim therefor is filed on or before

April 15, 1979.”

§119 Meals or lodging furnished for the convenience of the employer

Summary

Title 26, §119

Notes & Related Subsidiaries

Editorial Notes

References in Text

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