Forced Per Diem... Theft?

If there is no tax home, a driver is not entitled to take per diem or food costs when traveling away from home. It is in the rules.

http://www.irs.gov/publications/p463/ch01.html#en_US_publink100033750


Tax Home



To determine whether you are traveling away from home, you must first determine the location of your tax home.
Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

If you have more than one regular place of business, your tax home is your main place of business. See Main place of business or work, later.
If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. See No main place of business or work , later.

If you do not have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home.

 

Correct.

Like so many things when it comes to taxes, tax home is pretty loosely defined, as the above shows. It seems doubtful the IRS would try to pin the category "itinerant worker" on any OTR driver who worked for just one trucking company the whole year. Especially if the IRS's mailing address on file for that driver had been the same for several years. I'd definitely still be deducting if I never bought my condo and just had my postal mailbox all these years.

 

Ah if only it was the good old days(like just a few years back...) when we just simply claimed it at the end of the year and got back a nice sized refund on our taxes. Again I think per diem should be optional and should be CLEARLY explained how it works before any driver signs up for it.

 

You and I are on the same page I just wasn't real concerned about the tax home issue right now.

btw I just phoned our payroll dept. to ask how they handle the potentially serious problem of excess per diem being paid to the driver. They said what they do is, the moment a trip sheet arrives in the home office, the computer runs a check on the driver's previous per diem pay starting from that moment and going back 3 weeks. If the daily average exceeds $52, they cap the per diem pay to make the average come out to exactly $52, and put the rest in gross wages as mileage pay.

Kinda figured they'd have to do something like that, based on what I've read. The IRS gets real stinky with companies that overpay per diem.

 

I'm with you, why would anyone want to pay the IRS taxes on 11k if they don't have to.

 

I think I figured out what the company is referring to in that cryptic third sentence. It sounds like when you do the per diem, instead of only being able to deduct 80% of the $52/day, which is what the IRS restricts drivers to when they do the deduction at tax time, you get to have the entire $52/day of per diem be regarded as nontaxable pay.

From my last year's Form 1040 that would increase the amount of my pay that is nontaxable by about $3000.00, which at the 15% rate translates into a net savings in income tax of $450.00. (You may not actually achieve $52/day with per diem if you don't get enough miles though. So that $450.00 estimate's probably just a little high.)

The IRS must be charging that $450 difference to the company. Still, this doesn't rescue that third sentence from being pure nonsense. It's pretty clear it was designed to hoodwink drivers into believing something that's just plain false.

 

I have dealt with many IRS audits over the years on the various business returns and personals I prepare.

As the economy worsens, like it did in the late 70's and early 80's the IRS looks for any additional income it can.

They have nailed workers for this in the past. Whether they will in the future is just a guess.

I am required as an enrolled agent to give the proper advice.

 

Ok so if you could medic seriously explain this to me... I was told the maximum any company can pay a driver in per diem pay is 10 cents a mile. Yet I see some companies offering 11, 12, and even 14. So what happens to those drivers? Are they forced to pay back the amount over 10 cents if they were say, audited?

 

That is under the plan the company has. I would have to have the plan and review it and then look into the law.

I am not fond of per diem plans, they really only benefit the company.

There are exceptions to this, because there might be a few of the drivers that would have no real tax effect savings. But, I always look at the full picture.

 

FYI: Current rumor in trucking management is that in September the per diem went up to $59 - We have been advised by a trucking organization we belong to.

Also, if the company is assigning by a nightly basis and not mileage, you shouldn't go over the max.