No Result
View All Result
SUBMIT YOUR ARTICLES
  • Login
Monday, October 20, 2025
TheAdviserMagazine.com
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal
No Result
View All Result
TheAdviserMagazine.com
No Result
View All Result
Home Financial Planning

Northwestern Mutual files tax case amid OBBBA meal crackdown

by TheAdviserMagazine
4 weeks ago
in Financial Planning
Reading Time: 4 mins read
A A
Northwestern Mutual files tax case amid OBBBA meal crackdown
Share on FacebookShare on TwitterShare on LInkedIn



Financial advisors and tax professionals may have lots to chew on with the business owners among their clients over the latest changes to the rules for business meals.

But shifting tax statutes about noshing on the job have been causing heartburn for far longer. 

For example, in a lawsuit filed earlier this month in the Milwaukee federal court, Northwestern Mutual demanded a tax refund of more than $23 million that the giant insurer and wealth management firm argued it and thousands of employees at two corporate offices should not have paid over four years for the company’s cafeterias. The complaint traced the company’s 110-year history of providing lunch and its several tax haggles over the years about the cafeterias with the IRS.

READ MORE: The big changes to HSAs and what they mean for planning

A new normal for food at work?

The lawsuit also reflects the complexity of the many tax incentives tied in some way to eating for business purposes. The guidelines giving companies and their workers an exemption from their gross income for the cost of onsite cafeterias is remaining in place, but the One Big Beautiful Bill Act will eliminate a separate deduction for the cost of those lunchrooms starting next year. 

The 2017 tax law had cut that deduction to 50% of the cost of onsite cafeterias. However, pandemic-era legislation restored it temporarily to 100% for two years. Unless they qualify for exceptions to the new law for restaurants and the fishing and oil industries, employers that provide workers with lunch or snacks will no longer get to deduct the cost in 2026. The law will cause large companies and employers like universities and hospitals to consider reducing or dropping their onsite meals, according to Michael Chuah, the principal attorney of Paxterra Law.

“It really is targeting very specific types of companies that have this type of benefit like an employee perk,” Chuah said. “When you work in those types of environments, it is certainly possible that you’re going to lose that 50% deduction.”

But, like wealthy clients, large companies like Northwestern, LPL Financial and Coca-Cola frequently get litigious with the IRS over their tax bills. Northwestern alleged the federal government owes the firm $23,047,094 for the repayment of income, payroll and Social Security taxes, plus interest, from the years 2014-2015 and 2018-2019 based on the corporate cafeterias in its downtown Milwaukee headquarters and suburban office in Franklin, Wisconsin.

“Northwestern Mutual is just one of the many targets of a decades-long bureaucratic hostility towards Section 119’s plain language broadly excluding from gross income the value of on-campus meals furnished for the ‘convenience of the employer,’ conceded by the

Treasury Department to encompass meals furnished for any ‘substantial noncompensatory business reason,'” the complaint said.

“While Congress has consistently expanded the scope of the exclusion through multiple amendments to Section 119 over the decades since its enactment, the IRS has repeatedly resisted these Congressional affirmations of the exclusion’s broad scope, thwarting the efforts of employers across the country to invoke the protections of Section 119(a)(1),” it continued. “In 1978, these bureaucratic usurpations became so problematic that Congress was compelled to impose a moratorium on the Treasury Department’s enactment of any new regulations seeking to interpret Section 119 out of the Code, which remained in effect for five years. Institutional memories have faded, however, as the IRS has resumed its systematic thwarting of the sweeping scope of Section 119, burdening thousands of employers and millions of rank-and-file employees across the country with taxes they simply do not owe.”

Representatives for the IRS said the agency doesn’t comment on pending lawsuits. Industry news outlet Insurance Business first reported the Sept. 2 lawsuit.

READ MORE: Caps, credits, contributions: Tax planning for parents under OBBBA

Food for thought

Northwestern, which generated a record $38 billion in revenue last year, gave out its first free lunch to employees in January 1915. The company received a ruling from the IRS in 1948 enabling it to exclude its on-campus meals from gross income, and it resolved a dispute with the agency 50 years later over the deduction for those expenses in 1991 and 1992, according to the complaint. 

However, the IRS challenged the company’s use of that exemption for 2014-15 and 2018-19 and “put forward inconsistent and erroneous justifications for disallowing those claims,” according to the lawsuit.

If Coca-Cola’s ongoing case over several billions of dollars in taxes for the years 2007 to 2009 is any indication, the Northwestern case could take several years to reach a ruling or a resolution. OBBBA didn’t alter that exemption from an employee’s gross income for the cafeteria, but the vast majority of companies or other employers with a cafeteria will no longer get the 50% deduction for the expense. That doesn’t mean they’ll be completely without any tax deductions for the cost of a business meal, though.

“For businesses, tax deductions for meals and entertainment expenses are governed by a maze of rules,” according to a guide by accounting firm RSM. “Allowable deductions vary based on the context and purpose of the meals or entertainment, thus making proper treatment of such expenses a challenging area for tax compliance. In addition, the rules have changed several times over the past decade. With additional changes effective in 2026, taking a fresh look at the deductibility of these expenses may be a good idea for many employers.”

The alterations to the deduction under Section 274 and related sections of the tax code should prompt employers and their advisors to consider shifting part of the cost of work meals and whether to limit them or document them more carefully, according to a blog by Harper & Company Certified Public Accountants. But “meals provided by restaurants or catering vendors in bona fide business transactions” can still get a deduction, it noted.

“Because it changes the game for how companies budget, plan employee perks, cafeterias, staff policies. If you didn’t know this was coming, you could face big tax surprises in 2026,” the blog said. “Also, employee benefits folks will need to communicate clearly. What used to be a ‘perk’ may now come with a cost or reduced tax benefit for the company.”

While entrepreneurs will need to huddle with their advisor or CPA to get into their specific situations, they can figure out the basic criteria for whether a meal might get the deduction. The new rules distinguish between daily meals in a cafeteria and a special occasion or a specific business activity, Chuah said. The former used to qualify for a deduction, but it will no longer get it next year. But the latter kind will still receive a deduction.

“It’s kind of reverse psychology,” he said. “When you read the rule as an employer, it’s a little bit funky, because you have to figure out what is qualifying.”



Source link

Tags: CaseCrackdownfilesmealMutualNorthwesternOBBBAtax
ShareTweetShare
Previous Post

Medicare’s Mental Health Expansion Sounds Great—Until You See Who’s Still Left Out

Next Post

Explainer-H-1B visa – what is it and who are its beneficiaries?

Related Posts

edit post
Can You Get a Business Loan Without a Business Bank Account?

Can You Get a Business Loan Without a Business Bank Account?

by TheAdviserMagazine
October 20, 2025
0

Key takeawaysMost lenders require you to have a business bank account so that they can authenticate your business and review...

edit post
Charging For Estate Planning And Document Prep: Navigating Regulatory Hurdles And Real Pricing Benchmarks From Kitces Research

Charging For Estate Planning And Document Prep: Navigating Regulatory Hurdles And Real Pricing Benchmarks From Kitces Research

by TheAdviserMagazine
October 20, 2025
0

While estate planning has long been an integral part of the financial planning process, most advisors' roles have historically been...

edit post
Women’s Long Sleeved Ruffle Dress only .49!

Women’s Long Sleeved Ruffle Dress only $16.49!

by TheAdviserMagazine
October 19, 2025
0

This Women’s Long Sleeved Ruffle Dress is so pretty! Amazon has this Women’s Long Sleeve Ruffle Dress for just $16.49...

edit post
*HOT* Lululemon Align Leggings as low as  shipped! (Reg. -8)

*HOT* Lululemon Align Leggings as low as $39 shipped! (Reg. $88-$118)

by TheAdviserMagazine
October 19, 2025
0

Wow! If you love Lululemon Leggings, don’t miss this HOT sale going on right now! Lululemon is currently running a...

edit post
New Citi American Airlines Card: Companion Pass, Lounge Access, 0 Fee

New Citi American Airlines Card: Companion Pass, Lounge Access, $350 Fee

by TheAdviserMagazine
October 19, 2025
0

With Citi emerging as the sole issuer of American Airlines credit cards, the bank is expanding its collection of cards...

edit post
Looking for a Work From Home Job?

Looking for a Work From Home Job?

by TheAdviserMagazine
October 18, 2025
0

Have you ever dreamed of working from home… but felt completely stuck before you even got started? Maybe you’ve had...

Next Post
edit post
Explainer-H-1B visa – what is it and who are its beneficiaries?

Explainer-H-1B visa - what is it and who are its beneficiaries?

edit post
8 Executor-Proof Steps That Make Settling an Estate Easier

8 Executor-Proof Steps That Make Settling an Estate Easier

  • Trending
  • Comments
  • Latest
edit post
77-year-old popular furniture retailer closes store locations

77-year-old popular furniture retailer closes store locations

October 18, 2025
edit post
Pennsylvania House of Representatives Rejects Update to Child Custody Laws

Pennsylvania House of Representatives Rejects Update to Child Custody Laws

October 7, 2025
edit post
What to Do When a Loved One Dies in North Carolina

What to Do When a Loved One Dies in North Carolina

October 8, 2025
edit post
Probate vs. Non-Probate Assets: What’s the Difference?

Probate vs. Non-Probate Assets: What’s the Difference?

October 17, 2025
edit post
California Attorney Pleads Guilty For Role In 2M Ponzi Scheme

California Attorney Pleads Guilty For Role In $912M Ponzi Scheme

October 15, 2025
edit post
Baby Boomers Are Flocking to This Florida Town — but Not for the Weather

Baby Boomers Are Flocking to This Florida Town — but Not for the Weather

October 9, 2025
edit post
Can You Get a Business Loan Without a Business Bank Account?

Can You Get a Business Loan Without a Business Bank Account?

0
edit post
Amazon Is Planning to Cut 15% of Its HR Workforce. Should Americans Be Worried?

Amazon Is Planning to Cut 15% of Its HR Workforce. Should Americans Be Worried?

0
edit post
How to Choose the Right Influencers for Brand Promotions

How to Choose the Right Influencers for Brand Promotions

0
edit post
The Future of Channel Data Management

The Future of Channel Data Management

0
edit post
Charging For Estate Planning And Document Prep: Navigating Regulatory Hurdles And Real Pricing Benchmarks From Kitces Research

Charging For Estate Planning And Document Prep: Navigating Regulatory Hurdles And Real Pricing Benchmarks From Kitces Research

0
edit post
Tariff exposure, EV business on investor agenda

Tariff exposure, EV business on investor agenda

0
edit post
Can You Get a Business Loan Without a Business Bank Account?

Can You Get a Business Loan Without a Business Bank Account?

October 20, 2025
edit post
The Future of Channel Data Management

The Future of Channel Data Management

October 20, 2025
edit post
Tariff exposure, EV business on investor agenda

Tariff exposure, EV business on investor agenda

October 20, 2025
edit post
Rare earths gain amid U.S. effort to beat China’s dominance

Rare earths gain amid U.S. effort to beat China’s dominance

October 20, 2025
edit post
Investors bet on AI, but gold keeps winning

Investors bet on AI, but gold keeps winning

October 20, 2025
edit post
Saylor’s Strategy Adds 168 Bitcoin in Post-Crash Week

Saylor’s Strategy Adds 168 Bitcoin in Post-Crash Week

October 20, 2025
The Adviser Magazine

The first and only national digital and print magazine that connects individuals, families, and businesses to Fee-Only financial advisers, accountants, attorneys and college guidance counselors.

CATEGORIES

  • 401k Plans
  • Business
  • College
  • Cryptocurrency
  • Economy
  • Estate Plans
  • Financial Planning
  • Investing
  • IRS & Taxes
  • Legal
  • Market Analysis
  • Markets
  • Medicare
  • Money
  • Personal Finance
  • Social Security
  • Startups
  • Stock Market
  • Trading

LATEST UPDATES

  • Can You Get a Business Loan Without a Business Bank Account?
  • The Future of Channel Data Management
  • Tariff exposure, EV business on investor agenda
  • Our Great Privacy Policy
  • Terms of Use, Legal Notices & Disclosures
  • Contact us
  • About Us

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • Financial Planning
    • Financial Planning
    • Personal Finance
  • Market Research
    • Business
    • Investing
    • Money
    • Economy
    • Markets
    • Stocks
    • Trading
  • 401k Plans
  • College
  • IRS & Taxes
  • Estate Plans
  • Social Security
  • Medicare
  • Legal

© Copyright 2024 All Rights Reserved
See articles for original source and related links to external sites.