a-98-100.pdf

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# Part IV - Items of General Interest

The Service announces that the proposed training materials
relating primarily to the application of section 119 of the
Internal Revenue Code to meals provided to the employees in the
hospitality industry will not be finalized by October 31, 1998.
The period within which to indicate interest in the settlement
initiative related to these issues will continue to include the
period ending 30 days following the issuance of final training
materials.

## Announcement 98-100

The Internal Revenue Service announces today that the
proposed training materials relating primarily to the application
of section 119 of the Internal Revenue Code to meals provided to
the employees in the hospitality industry, as described in
Announcement 98-77, 1998-34 I.R.B. 30 (the Proposed Section 119
Training Materials), will not be finalized by October 31, 1998.
The Service had indicated in Announcement 98-78 that it expected
to finalize the training materials by that date. However, the
Service has determined that it needs additional time in order to
consider the comments received on the proposed training materials
and to discuss such comments with the commentators.

In Announcement 98-78, 1998-34 I.R.B. 30, issued on August
4, 1998, the Service announced a settlement initiative relating
to employee meals. The purpose of the initiative is to resolve
certain issues quickly and eliminate the need for further
potentially costly controversies for the periods covered by the
settlement initiative. The settlement initiative provides that
taxpayers can indicate their interest in accepting the offer no
later than 30 days after the Proposed Section 119 Training

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Materials are finalized. Taxpayers will continue to have until
30 days after the release of final training materials to indicate
an interest in the settlement initiative relating to these
issues.

The Service received questions about one aspect of the
settlement offer. In response to these questions, the Service
clarifies that, for taxable years beginning on or after January
1, 1995 and before December 31, 1998, the taxpayer may deduct an
amount of the otherwise allowable expenses for such periods,
taking into account section 274 (n) (1), but substituting 70% in
section 274 (n) (1) in place of 50%. If, for example, a taxpayer
incurred $100 of allowable expenses for employee meals in the tax
year beginning on January 1, 1996, section 274 (n) (1) would
ordinarily limit the deduction of those expenses to $50. The
settlement offer, as set forth in Announcement 98-78, provides
for a $70 deduction for the 1996 tax year.

For further information on the settlement initiative,
contact Bob Patrick, at (702) 455-1403 (not a toll-free number) .
For further information on the training materials, contact Dan
Bryant, Senior Analyst, Office of Employment Tax Administration
and Compliance at (202) 622-3650 (not a toll-free number) .

The principal author of this announcement is Thomas Burger,
Director, Office of Employment Tax Administration and Compliance
(OETAC) . For further information regarding this announcement
contact Bob Patrick at (702) 455-1403 (not a toll-free call) .