You are 100% correct that you are paying with after tax dollars. If you are taxed on the value of the meal you will be taxed twice. That makes sense.
What doesn't make sense is taking a job (contract) on which there is no expected net income. If the financial arrangement is reimbursement only, and we say the reimbursement is not income, then we had zero expectation of income from taking the contract. In that case, there would actually be no intent to realize a profit and no profit motive could be proved. Therefore, since no profit motive ever existed in the first place, the job (contract) may not qualify as being a job intended to generate income. The same argument might hold true (or not) for a job with very low fee and high reimbursement which could therefore not possibly generate net income on its own apart from other jobs.
I believe it is questionable what is income on a low fee or no fee shop with a large reimbursement, such as fine dining. I certainly have no answer to the questions about what is reportable income and what is not reportable income. At the present, I understand (could be wrong) that most shoppers report their fees and reimbursements as total income and then back out the reimbursements as a business expense. This is what lots of us do, but it may prove to be in error if the right auditor takes a hard look during the right audit.
I'm certainly not suggesting anyone change the way they account for fees/reimbursements based on my thinking. What this amounts to is one more opinion which may or may not have any relationship to facts.
Mary Davis Nowell. Based close to Fort Worth. Shopping Interstate 20 east and west, Interstate 35 north and south.