Nelson Tax Accounting, Ltd
Custom Tax Service
Joanne M. Elsen CPA, PC
Yes, they should report it after the first payment of the year (or if they have a payroll service, usually they will do it since they have to do the DE34 when hiring new employees).
From Pub 15-B:
Lodging on Your Business Premises You can exclude the value of lodging you furnish to an employee from the employee's wages if it meets the following tests.
It is furnished on your business premises.
Your point is well taken. However, this provision was part of the extender legislation that was signed into law on 12/19/2014 and expired again on 12/31/2014. Although retroactive to 1/1/2014, it really only had a "shelf life" of 12...
The latest issue of the NSA member magazine is available to read online.