Reference no: EM133258415

Meal Allowance

Suppose the City of Minneapolis has replaced its police department with a new Public Safety Agency, which combines the roles of law enforcement and social services. Officers of the PSA, called Agents, generally work 10 hour shifts, sometimes in cars, and sometimes on foot or bicycle. They do not have designated break or meal times, and are never off duty during the shift, but they are allowed to stop and eat twice during a shift. They can eat anywhere, so long as it is within their assigned area of duty. In order to be seen as citizens and members of the community, Agents are encouraged by the PSA to eat in local dining establishments, although they can pack their own meals if they prefer. To encourage this behavior, the Agency provides a meal allowance, included in the Agents regular paychecks. The allowance is equal to an average cost of meals at restaurants in the Minneapolis area and is the same for all Agents, regardless of rank, but is paid even in periods when an Agent is on paid vacation, or serving in PSA headquarters. While eating at local dining establishments, Agents are on duty and are encouraged to talk with and answer questions from any members of the community who approach them. They must also immediately leave to answer any emergency calls whenever they are the closest available Agents. Suppose you represent a client who is a PSA Agent, and the client has asked whether her meal allowance is excludible from gross income. Locate and read the following two court decisions, and decide what your answer would be based on that authority alone (Actually feel free to find and use other authority, but you are not required to do so):

Commissioner v. Kowalski, 434 U.S. 77 (1977)

Christey v. United States, 841 F.2d 809 (8th Cir. 1988).

For example, you should identify the facts that were important in each court case, and ask: how are our facts similar or different? What were the important laws that the court applied or interpreted, and how does that affect our case? There may not be a clear, simple answer. You can conclude that our case would likely have one result, while acknowledging the reasons that go in the other direction.

Additional questions (your answers here can be brief):

What if, instead of receiving a cash allowance, the Agents paid for their meals, submitted receipts to the PSA, and received full reimbursements?

What if, instead of receiving the cash allowance, the PSA established community centers throughout the city that, among other things, provided in-kind meals to the Agents? Would that change your answer?

Suppose your client excluded the meal allowance from gross income, but was audited by the IRS, who disallowed the exclusion. The client would like to challenge this result in court. Which court might you suggest for the client, and why?