Tax Legal Services · Primary-source case analysis

Kowalski: Cash Meal Allowances Were Taxable Compensation

By Aneeta Mishra and Timothy Chan

Published August 28, 2026

Commissioner v. Kowalski involved fixed cash allowances paid to New Jersey troopers for meals while on patrol.

Section 61 broadly reaches compensation

The cash payments were economic benefits received because of employment and therefore entered gross income absent a specific exclusion.

Section 119 addressed meals furnished in kind

The statutory text and history did not extend the exclusion to unrestricted cash reimbursements.

Employer convenience did not create a free-standing exclusion

Even if the patrol meal arrangement served operational needs, that rationale could not override the limits Congress placed in section 119.

Current reimbursement rules require separate analysis

Accountable-plan reimbursements, substantiated business expenses, and in-kind meals each have distinct statutory and regulatory treatment.

Key takeaways

• Classify the payment as cash, reimbursement, or an in-kind meal.
• Document substantiation and any return-of-excess requirement.
• Apply section 119 only to qualifying meals or lodging.
• Review current accountable-plan rules before reporting payroll income.