PER DIEM PROGRAM SAVES MOTOR CARRIER $3,000 PER DRIVER

"Partnering with Per Diem Plus provided us a turn-key solution configured to meet the needs of our fleet and offer this benefit to our drivers who love our new per diem app."
Nick A., Controller

ABOUT:

With over 400 power units the motor carrier is a leader among specialized companies serving the United States and Canada.

THE CHALLENGE:

The Controller was looking for a solution to two significant challenges impeding growth. The first involved reducing driver turnover and the second was raising driver pay in a tight labor market to improve driver recruiting.

REASONS:

    • The 2017 Tax Cuts and Jobs Act eliminated the ability of employee drivers to claim per diem as a tax deduction on their individual income tax return.
    • The absence of a company-sponsored per diem program increased driver turnover and hampered recruiting.
    • Creating IRS-compliant contemporaneous per diem records from ELD back ups is immensely time consuming.

WHAT CUSTOMER NEEDED:

    • An IRS-compliant mobile application platform solution that would allow for rapid deployment with minimal investment in dollars and/or IT resources.
    • An interface to manage individual and team drivers operating both ELD-exempt and non-exempt trucks that would be easy-to-use for non-technical users.
    • A scalable,  secure, cloud-based solution to meet the growing needs of their fleet.
    • Automated administration of a company-paid accountable per diem program.

THE PER DIEM PLUS SOLUTION:

The only IRS-compliant mobile application platform that automated administration of an accountable trucker per diem plan.

  • Fleet-branded Android & iOS mobile apps that individual and team drivers could use on their own device or install on fleet-owned devices.
  • Formatted per diem payroll reports streamlining the burdensome IRS tax compliance regulations.
  • Eliminated the need to retain over 100,000 pages annually of ELD / AOBRD backups for no less than IRS-required 3 years.
  • Superior driver support through our US-based Driver Success Team via Phone, Text and/or Email.
  • A “Never Lost” retention policy that insures fleet per diem data is instantly available for 4 years.

RESULTS:

  • The fleet is saving $3,000 per driver annually through reduced income and payroll taxes and workers compensation.
  • The tax-free per diem program increased Married drivers pay by 2.8 cents per mile and Single drivers pay by 4.2 cents per mile.
  • Driver turnover is down to 15%.
  • The program launched in 21 days including tech implementation and driver training.

The carrier was able to increase driver pay AND reduce expenses through implementing their per diem program with Per Diem Plus FLEETS.

Questions? Contact Mark W. Sullivan Program Manager - Per Diem Plus FLEETS

About: Per Diem Plus FLEETS is a proprietary mobile software application that was designed by truckers and built by tax pros. It is the only IRS-compliant mobile app that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups (logbooks) to substantiate away-from-home travel.

MAKING THE IRS WORK IN YOUR FAVOR

Presented by Mark W. Sullivan, EA - Tax Counsel for Per Diem Plus, LLC

 

 

 

 

 

DOWNLOAD "Making the IRS Work In Your Favor" (PDF)

Questions? Contact Mark W. Sullivan, EA

 

 

 

The Per Diem Plus® Fleets mobile application platform enables fleets of any size to implement an IRS-compliant per diem plan that will:

  • Allow drivers to pocket 2.6¢ - 3.9¢ EXTRA PER MILE tax free cash
  • Offset tax reforms elimination of itemized deductions for employee drivers, like meals per diem
  • Automate administration of an accountable trucker per diem plan
  • Streamline tax compliance and eliminate the need to retain ELD backups for no less than 3 years

Per Diem Plus Small Fleets is for fleets with less than 50 drivers and Per Diem Plus Fleets is for fleets with over 50 drivers.

"Partnering with Per Diem Plus provided Reliable Carriers a turn-key solution configured to meet the needs of  our fleet and offer this benefit to our drivers” 

Nick Adamczyk, Controller
Reliable Carriers, Inc.


FLEETS is a cost-effective solution designed for motor carriers with more than 50 drivers that want to implement a mobile per diem application solution managed through Per Diem Plus web services. The white-label option allows a fleet to customize and configure the app to meet their requirements.


DOWNLOAD PRODUCT SHEET


Questions? Contact us at info@perdiemplus.com

Per Diem Plus , a proprietary software application, which provides automatic per diem and expense tracking for truckers (USPTO Registration #86754053)

The ELD mandate has contributed to record freight rates that, along with tax reform, have been a boon for trucking companies. Unfortunately, due to the prospect of lower wages for employee drivers resulting from the elimination of itemized deductions, many prospective drivers are opting for a gig-economy.  As such, the driver shortage will continue to get worse unless fleets take proactive steps that mitigate the negative financial impact on drivers[i].

“Partnering with Per Diem Plus provided Reliable Carriers a turn-key solution configured to meet the needs of our fleet and offer this benefit to drivers” 
Nick Adamczyk, Controller
Reliable Carriers, Inc.

The Per Diem Plus® for FLEETS mobile platform is a cost-effective solution that enables fleets to easily implement an IRS-compliant substantiated per diem plan[ii] that will raise employee driver take-home pay and enhance recruiting and retention.   Implementing a per diem plan will offset the elimination of driver tax deductions for per diem and unreimbursed employee business expenses[iii].

A company-sponsored per diem plan can increase driver pay by 2.8ȼ - 4.3ȼ per mile, while saving the fleet over $2,600 per driver.

The IRS allows a maximum of $63 per day for travel in the USA [$68 for Canada], but a fleet can opt for a lower amount, i.e. $45 per day, so long as it is paid at a flat rate[iv].

How does a fleet convince drivers who previously itemized deductions to claim per diem and unreimbursed business expenses to participate in a company-paid per diem program? Optics are everything with drivers; show them the numbers. The average driver who is away from home 5 nights will take home an extra $70 a week or 2.8ȼ per mile.


Payroll computation: Per diem is treated as pre-tax deduction; employment and income taxes are computed and withheld; per diem is added back to payroll as a non-taxable reimbursement.

A company that offers a per diem program is required to prove

  1. Drivers were away from home overnight
  2. Identify the “date, place and amount” of each per diem event
  3. Retain substantiation through the retention of ELD backups or Per Diem Plus platform for no less than 3 years[v]

The burdensome IRS compliance requirements are one reason most trucking companies eschew company-paid per diem programs. While, ELD’s automate driver hours of service compliance, the process of creating IRS-compliant contemporaneous per diem record is immensely time consuming. Fleets that implement Per Diem Plus can run an IRS-compliant per diem reports for a week, month or even a year in under a minute. Furthermore, per diem records are retained on the PDP secure cloud and instantly accessible to a fleet for four (4) years.

BOTTOM LINE:  Fleets that offer a per diem program can increase their driver’s earning potential by thousands of dollars per year with relative ease by partnering with Per Diem Plus.
Drivers, tell your fleet managers about Per Diem Plus or download it yourself and try it free for 30 days – No Credit Card Required.
Fleets, please contact us to learn more about partnering with Per Diem Plus.  Or, download our PDP Fleets & Small Fleets Product Sheet for a high-level overview on how we can work together.
   
Download Per Diem Plus for iOS HERE
Download Per Diem Plus for Android HERE

This article was written by Mark W. Sullivan, EA, who has been providing taxpayer advocacy, consulting, and litigation services since 1998. Prior to starting a private practice, Mr. Sullivan was an Internal Revenue Officer with the New York, NY, Saint Louis, MO and Washington, D.C. offices of the Internal Revenue Service. He has over a decade of experience advising transportation industry clients with respect to per diem issues.

Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.

Copyright 2018 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC

[i] The average company OTR driver is away from home for 255 nights per year and will be forced to cover almost $18,000 of meals and job-related expenses with after-tax income

[ii] All amounts paid under the arrangement are treated as paid under an accountable plan and are excluded from income and wages.

[iii] Under H.R. 1 “Tax Cuts and Job Act” OTR employee truck drivers will no longer be allowed a tax deduction for unreimbursed business expenses, which includes “meal expenses that take place during or incident to any period subject to the Department of Transportation's “hours of service” limits” and other job-related expenses.

[iv] Rev. Proc. 2011-473.03. Flat rate or stated schedule

(1) In general. Except as provided in section 3.03(2) of this revenue procedure, an allowance is paid at a

flat rate or stated schedule if it is provided on a uniform and objective basis for the expenses described in

section 3.01(1) of this revenue procedure. The allowance may be paid for the number of days away from

home performing services as an employee or on any other basis that is consistently applied and in

accordance with reasonable business practice.

[v] Rev. Proc 2011-47 § 4.03: This amount is deemed substantiated for purposes of 1.274-5T(b)(2)(i) and (c), provided the employee substantiates the elements of “time, place, and business purpose of the travel” for each day or partial day in accordance with those regulations.

Schedule Fleet Demo

The passage of tax reform will rightly benefit trucking companies, but it eliminated the deductibility of per diem for employee drivers. A recent article in Freightwaves suggested “For companies that have previously considered adding a per-diem plan, but have yet to do so, now is a great time to reconsider your recruiting strategy”.[i] Unfortunately, the author overlooked three nagging issues that fleets must overcome 1) the IRS requires a fleet to substantiate the “date, place and amount” of each per diem event[ii] 2) an ELD backup for a one driver for a single week can be 20-plus pages, and 3) FMCSA allows ELD data to be discarded after 6 months, but IRS requires 3 year data retention[iii]. Per Diem Plus® resolves these issues in a cost-effective and easy-to-use, mobile platform designed for the end users; truck drivers.

Key Features:

  • IRS-Compliant
  • Available for Android & iOS
  • Uses GPS to substantiate travel in USA and Canada
  • Auto activates & ends trip tracking
  • Scan receipts and record expenses
  • Accountant-friendly itemized reports
  • 4-year Cloud-based data retention
  • Designed and managed in the USA
Fleet Options
  • Direct driver subscription
    • (Google Play & iTunes)
  • Fleets (White Label)
    • Fleet-branded Android & iOS apps
    • Configured for fleet
    • Customize geo-fence & per diem rate[iv]
    • Free install with Driver ID login
    • App management through web services portal
    • 4 year dedicated cloud storage
    • As low as $4.00/month/driver

Trucking companies stand to benefit greatly from H.R. 1 “Tax Cuts and Job Act”, but OTR employee truck drivers will not be so fortunate. As a result, the driver shortage will get worse unless fleets take proactive steps that can mitigate the negative impact on drivers. Unfortunately, Congress’s “one size fits all” approach to tax reform overlooked the most important asset to fleets: Drivers. While the media is awash with articles covering the ELD mandate and tax reform, everyone overlooked the impact on tax compliance recordkeeping obligations to substantiate trucker per diem.  Everyone but Per Diem Plus.

How does a fleet convince drivers who previously itemized deductions to claim per diem and unreimbursed business expenses to participate in a company-paid per diem program? Optics are everything with drivers: show them the numbers.

Cost to Fleet Table 2

BOTTOM LINE:  Fleets that offer a per diem program can increase their driver's earning potential by thousands of dollars per year with relative ease by partnering with Per Diem Plus.

Drivers, tell your fleet managers about Per Diem Plus or download it yourself and try it free for 30 days - No Credit Card Required.
   
Download Per Diem Plus for iOS HERE
Download Per Diem Plus for Android HERE

Per Diem Plus for Fleets:  The white label option allows a motor carrier to license our proprietary mobile application software. Need software development services? Our US-based team can design, build and manage your fleet-branded per diem mobile app for you. Contact us at info@perdiemplus.com to learn more.

This article was written by Mark W. Sullivan, EA, Tax Counsel for Per Diem Plus, LLC, who has been providing taxpayer advocacy, consulting, and litigation services since 1998. Prior to starting a private practice, Mr. Sullivan was an Internal Revenue Officer with the New York, NY, Saint Louis, MO and Washington, D.C. offices of the Internal Revenue Service. He has over a decade of experience advising transportation industry clients with respect to per diem issues. Have questions? Contact Mr. Sullivan at marks@perdiemplus.com.

Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.

Per Diem Plus®, a proprietary software application, which provides automatic per diem and expense tracking to truckers

Per Diem Plus, LLC Copyright 2018

[i]Top 3 things to know about how tax reform impacts your trucking company” Freightwaves (January 24, 2018) Troy Hogan

[ii] Treasury Regulation 1.274-5A(c)(2) governs the rules for substantiation of travel expenses. A logbook meets the requirements because it is a contemporaneous record that is created "at or near the time the expense or travel occurred" and establishes the "time, date and place" of the travel.

[iii] A Statutory Conflict - 6 month / 3-year rule

FMCSA Part 395 section 395.8(k)(1) requires motor carriers to retain all supporting documents used by the motor carrier to verify the information recorded on the driver’s record of duty status for a period of 6 months. Internal Revenue Code section 6501(a) establishes the statute of limitations for the IRS to assess taxes on a taxpayer expires three (3) years from the due date of the return or the date on which it was filed, whichever is later.

[iv] Rev. Proc. 2011-47 3.03. Flat rate or stated schedule

(1) In general. Except as provided in section 3.03(2) of this revenue procedure, an allowance is paid at a flat rate or stated schedule if it is provided on a uniform and objective basis for the expenses described in section 3.01(1) of this revenue procedure. The allowance may be paid for the number of days away from home performing services as an employee or on any other basis that is consistently applied and in accordance with reasonable business practice.

Congress’s “one size fits all” approach to tax reform overlooked the most important asset to fleets:  Drivers. While trucking companies rightfully stand to benefit with the passage of the “Tax Cuts and Job Act” employee drivers will not be so fortunate: Congress eliminated the tax deductibility of unreimbursed employee business expenses. Company (employee) OTR drivers who previously itemized deductions will be forced to cover almost $18,000 of meals and job-related expenses with after-tax income[1]. Faced with the prospect of lower wages, and many prospective drivers are opting for a gig-economy, the driver shortage will get worse unless fleets take proactive steps that mitigate the negative financial impact on drivers.

PDP Fleets & Small Fleets Product Sheet

As the table below highlights drivers lost a lot more than just the deduction for meals per diem that will significantly erode driver take-home pay.

 

EFFECTIVE OCTOBER 1, 2018 the trucker per diem rates were increased to $66 US and $71 Canada

 

Implementing an IRS-compliant substantiated per diem plan[2] using the Per Diem Plus Fleets mobile app platform is a simple, cost-effective fleet solution that will preserve driver take-home pay and offset the elimination of lost tax deductions for unreimbursed employee business expenses[i]. The IRS allows a maximum of $63 per day for travel in the USA [$68 for Canada], but a fleet can opt for a lower amount, i.e. $45 per day, so long as it is paid at or below the applicable federal per diem rate, a flat rate or stated schedule[ii]. A fleet is also required to substantiate the “date, place and amount” of each per diem event through retention of adequate records like ELD backups or Per Diem Plus for no less than 3 years[3].

Example A – Single Driver

OTR driver Tim earned $50,400 in 2017. He filed his tax return as single and claimed itemized deductions which included $16,695 of per diem[4], $1,000 for cell phone, miscellaneous tools and supplies. Because of the “Tax Cuts and Jobs Act” his taxes will decrease about $73, but he will incur almost $18,000 of out-of-pocket, unreimbursed expenses. What if the fleet implemented an accountable per diem plan where per diem is treated as a pre-tax deduction that is added back as a non-taxable reimbursement in the driver’s settlement?

  • Under a $63 per diem plan he would save $2,076 in taxes over 2017

Example B – Married Driver

OTR driver Tim earned $50,400 in 2017. He filed a joint tax return with his wife and claimed itemized deductions which included $16,695 of per diem, $1,000 for cell phone, miscellaneous tools and supplies. Because of the “Tax Cuts and Jobs Act” his taxes will decrease by about $632, but he will still incur almost $18,000 of out-of-pocket, unreimbursed expenses. What if the fleet implemented an accountable per diem plan?

  • Under a $63 per diem plan he would save $2,448 in taxes over 2017

How does a fleet convince drivers who previously itemized deductions to claim per diem and unreimbursed business expenses to participate in a company-paid per diem program? Optics are everything with drivers:  show them the numbers.

Trucking companies stand to benefit greatly now that H.R. 1 “Tax Cuts and Job Act” has become law, but OTR employee truck drivers will not be so fortunate. As a result, the driver shortage will get worse unless fleets take proactive steps that can mitigate the negative impact on drivers. Unfortunately, Congress’s “one size fits all” approach to tax reform overlooked the most important asset to fleets: Drivers.

Per Diem Plus for Fleets:  Options for licensing our proprietary mobile application software 1) White Label: make PDP your fleet per diem app 2) API: integrate the PDP software into a fleet mobile application. Need software development services? Our US-based team can design, build and manage your fleet-branded per diem mobile app for you. Contact us at info@perdiemplus.com to learn more.

 

This article was written by Mark W. Sullivan, EA, who has been providing taxpayer advocacy, consulting, and litigation services since 1998. Prior to starting a private practice, Mr. Sullivan was an Internal Revenue Officer with the New York, NY, Saint Louis, MO and Washington, D.C. offices of the Internal Revenue Service. He has over a decade of experience advising transportation industry clients with respect to per diem issues. Have questions? Please contact Mr. Sullivan at marks@perdiemplus.com.

Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.

Copyright 2018 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.

[1] Under H.R. 1 “Tax Cuts and Job Act” OTR employee truck drivers will no longer be allowed a tax deduction for unreimbursed business expenses, which includes “meal expenses that take place during or incident to any period subject to the Department of Transportation's “hours of service” limits” and other job-related expenses.

[2] All amounts paid under the arrangement are treated as paid under an accountable plan and are excluded from income and wages.

[3] Rev. Proc 2011-47 § 4.03: This amount is deemed substantiated for purposes of 1.274-5T(b)(2)(i) and (c), provided the employee substantiates the elements of “time, place, and business purpose of the travel” for each day or partial day in accordance with those regulations.

[4] OTR drivers are away from on average of 265 nights per year [265 x $63 = $16,695].

[i] In accordance with IRS Revenue Procedure 2011-47 Sec 4.04 (superseded most recently by Notice 2017-54) covers meals and incidental expenses only.

[ii] Rev. Proc. 2011-473.03. Flat rate or stated schedule

(1) In general. Except as provided in section 3.03(2) of this revenue procedure, an allowance is paid at a

flat rate or stated schedule if it is provided on a uniform and objective basis for the expenses described in

section 3.01(1) of this revenue procedure. The allowance may be paid for the number of days away from

home performing services as an employee or on any other basis that is consistently applied and in

accordance with reasonable business practice.

[iii] Reg. Section 1.274-5(c)(2)(iii)

How will the Tax Cuts and Job Act Impact OTR Truck Drivers?

On November 16, 2017 The U.S. House of Representatives passed H.R. 1 “Tax Cuts and Job Act”[1]. The U.S. Senate has released a companion tax overhaul bill that is scheduled for debate in the coming weeks. The House bill proposes 4 tax brackets and the Senate 7, but both bills propose among other things eliminating the deductibility of unreimbursed business expenses for employee truck drivers. In general, under both the Senate and House proposals company OTR drivers that previously claimed itemized deductions for unreimbursed expenses will experience a tax increase.

Example – Single Driver: OTR driver Wayne earned $50,600 in 2016. He filed his tax return as single and claimed itemized deductions of $21,038, which included $14,868 of net per diem, $4,840 for cell phone, tools, GPS unit, etc. and $1,893 of state income taxes. His tax bill will increase $1,052 under the Senate plan and $1,243 under the House plan.

What would the impact be on Wayne if he was married? The tax overhaul increases his tax bill by $ 469 under the Senate plan and $850 under the House plan.

 

 

This article was written by Mark W. Sullivan, EA, who has been providing taxpayer advocacy, consulting, and litigation services since 1998.   Mr. Sullivan has over a decade of experience advising transportation industry clients in per diem issues.

Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.

 Copyright 2017 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.

[1] https://www.congress.gov/congressional-report/115th-congress/house-report/409/1

 

To enroll or not to enroll in a company-paid per diem program that includes a fleet per diem administration fee, that is the question.

Background: ABC is a truckload carrier that offers voluntary company-paid per diem. Drivers who enroll are paid $.045 CPM of which  $0.10 CPM is allocated to per diem, less a $0.02 CPM fleet administration fee.  Drivers who choose not to enroll earn a flat $0.45 CPM and can deduct per diem on their own tax return.

John Smith recently went to work for ABC and is unsure if he should enroll in the company per diem plan. He departs home every Monday morning and returns home Friday evening, averages 2250 miles per week and works 50 weeks a year. John is married, but his wife is not working. He owns a modest home, and pays state income, real estate and personal property taxes.

The motor carrier claims he will take home more money and pay less taxes if he enrolls in their per diem program even after giving back $2,250 in fleet administration fees.

screen-shot-2016-12-28-at-4-01-30-pm

Conclusion: John may save a few hundred dollars in federal taxes, but he must forfeit $2,250 of additional income to do so. In addition, the tax savings come at an additional cost: $9,000 of wages omitted from his Form W-2 that will be noticed by a home or auto lender and may lower his employer 401(k) match, social security and workers compensation benefits.

This article was written by D R Sullivan & Company, CPA PC, an accounting firm that has been providing taxpayer advocacy, consulting, and litigation services since 1998.   The firm is tax counsel for Per Diem Plus, an automated per diem and expense tracking mobile app.

Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.

Copyright 2016 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.

 

A Catch 22 For Drivers

Drivers currently retain ownership of their paper logbooks to comply with the IRS income tax regulations. Now that the U.S. Court of Appeals for the Seventh Circuit has upheld the ELD mandate and ruled that the FMCSA has satisfied the objections made by the Owner Operators Independent Drivers Association, who will “own” the logbook data1?  While the media is awash with articles either applauding or deriding the court's decision, everyone has overlooked the mandate’s impact on tax compliance recordkeeping obligations for individual truck drivers.  Everyone but Per Diem Plus.

The history of the IRS is that they ONLY accept driver DOT logbooks as proof of overnight truck driving trips to substantiate travel expenses, like per diem. Treasury Regulation 1.274-5A(c)(2) governs the rules for substantiation of travel expenses.  A logbooks meets the requirements because it is a contemporaneous record that is created "at or near the time the expense or travel occurred"2 and establishes the "time, date and place" of the travel3. Contrary to popular belief a calendar or bookkeeper’s guesstimate worksheet of per diem trips does not fulfill these statutory requirements.

A Statutory Conflict - 6 month / 3 year rules

FMCSA Part 395 section 395.8(k)(1) requires motor carriers to retain all supporting documents used by the motor carrier to verify the information recorded on the driver’s record of duty status for a period of 6 months4. But...

Internal Revenue Code section 6501(a) establishes the statute of limitations for the IRS to assess taxes on a taxpayer expires three (3) years from the due date of the return or the date on which it was filed, whichever is later.

Drivers currently retain their logbooks to comply with income tax reporting and filing obligations. However, in my experience, since motor carriers own the ELD device they will assert ownership of the ELD data as well. And while fleets retain certain records required by FMCSA to comply with tax regulations, those using ELD’s promptly discard driver logbooks after 6 months. More troublesome is the revelation that many large fleets who were early adopters of ELD’s are now refusing to provide copies of the e-logs to their drivers. Will this behavior permeate the industry as fleets transition from paper to electronic logs?

What this means to you is that you may not have access to ELD data that is critical to both accurately claiming per diem expenses and defending yourself in the event of an audit. This will be particularly true if a driver is employed by multiple fleets during a calendar year. In the end, drivers will find themselves in a Catch 22 - a driver can have only one logbook that the motor carrier will now own so a driver cannot properly file income tax returns as they no longer have access to the logbook data.

Drivers that use Per Diem Plus have access to their data for four years whether they are driving for a company or themselves. Own your data and simplify your life by using the Per Diem Plus mobile app.

Want to join the conversation? Drop us a line at info@perdiemplus.com

 

This article was written by Mark W. Sullivan of D R Sullivan & Company, CPA PC, an accounting firm that has been providing taxpayer advocacy, consulting, and litigation services since 1998.   The firm has nearly a decade of experience advising motor carriers and telematics providers on IRS substantiated per diem and is tax counsel for Per Diem Plus®, an IRS-compliant automated per diem and expense tracking Android and iOS app.

Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.

Copyright 2016 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.

FMCSA Part 395 section 395.8(k)(1)

Supporting documents are the records of the motor carrier which are maintained in the ordinary course of business and used by the motor carrier to verify the information recorded on the driver’s record of duty status. Examples are: bills of lading, carrier pros, freight bills, dispatch records, electronic mobile communication/tracking records, gate record receipts, weight/scale tickets, fuel receipts, fuel billing statements, toll receipts, toll billing statements, port of entry receipts, cash advance receipts, delivery receipts, lumper receipts, interchange and inspection reports, lessor settlement sheets, over/short and damage reports, agricultural inspection reports, driver and vehicle examination reports, crash reports, telephone billing statements, credit card receipts, border crossing reports, custom declarations, traffic citations, and overweight/oversize permits and traffic citations. Supporting documents may include other documents which the motor carrier maintains and can be used to verify information on the driver’s records of duty status. If these records are maintained at locations other than the principal place of business but are not used by the motor carrier for verification purposes, they must be forwarded to the principal place of business upon a request by an authorized representative of the Federal Highway Administration (FHWA) or State official within 2 business days.

  1. Land Line Magazine (11/01/16)
  2. 1.274-5A(c)(2)(ii)(a)
  3. 1.274-5A(b)(1)
  4. https://www.fmcsa.dot.gov/regulations/title49/section/395.8

An employee truck driver new to the transportation industry asked the following question to the Per Diem Plus tax experts:  What is per diem?

Per diem simply means a “per day” travel expense allowance.  Although taxpayers have the option of keeping actual records of their travel expenses, the IRS has provided per diem allowances under which the amount of away-from-home meals and incidental expenses may be deemed to be substantiated.  These per diem allowances eliminate the need for proving actual costs.  However, a taxpayer must substantiate the amount, time, place and business purpose of expenses paid or incurred by adequate records or other evidence when traveling away from home1.

Both self-employed and employee truck drivers subject to the hours of services limitations of the Department of Transportation (DOT) can claim $63 for meals & incidental expenses (M&IE) for travel with the United States ($68 in Canada) and are not required to retain receipts or sales slips for these expenses.  A trucker can deduct 80% of these expenses on their income tax returns2.

 

Can a driver prorate per diem for partial days of travel?

A truck driver who is away from home for only a portion of a day can prorate the M&IE allowance.  For example, Per Diem Plus allows 75% of the M&IE rate where a driver departs their tax home after noon or returns home from a trip before noon. 

Are showers and reserved parking fees considered “incidental expenses?"

No.  Incidental expenses include only fees and tips given to porters, baggage carriers, hotel staff and staff on ships.  Transportation between place of lodging and place where meals are taken and the mailing cost of filing expense reports are no longer included in the definition of incidental expenses3.  Drivers using per diem rates may separately deduct expenses for postage, showers and reserved parking fees.

 

What documentation is required to substantiate overnight travel and expenses?

In order to claim any deduction, a taxpayer must be able to prove, if a tax return is audited, that the expenses were in fact paid or incurred.  The IRS deems travel expenses particularly susceptible to abuse and requires truck drivers maintain an adequate accounting and sufficient documentary evidence to prove overnight travel.  For example, logbooks, expense diaries or an IRS-approved software tool like Per Diem Plus.

Self-employed and employee drivers cannot claim per diem for lodging and are required to maintain documentary evidence for all lodging expenses4.

 

Can all truck drivers claim per diem?

No. An individual is not away from home unless their duties require them to be away from the general area of their home for a period substantially longer than an ordinary workday and it is reasonable for them to need to sleep or rest5.  For example, drivers who start and end a trip at home within the DOT 14 consecutive-hour “driving window” cannot claim per diem.

 

What qualifies as a tax home?

Tax home defined:  An individual’s tax home is considered to be:  (1) the taxpayer’s regular place of business, or (2) the taxpayer’s home in a real and substantial sense6.  A taxpayer who is itinerant or someone who has a home wherever they happen to be working is never away from home for purposes of deducting traveling expenses.

 

This article was written by D R Sullivan & Company, CPA PC, an accounting firm that has been providing taxpayer advocacy, consulting, and litigation services since 1998.  The firm has nearly a decade of experience advising large fleets and telematics providers on IRS substantiated per diem and is tax counsel for Per Diem Plus, an automated per diem and expense tracking Android app.

Please remember that everyone’s financial situation is different.  This article does not give and is not intended to give specific accounting and/or tax advice.  Please consult your own tax or accounting professional.

Copyright 2016 Per Diem Plus, LLC. The Per Diem Plus logo and Per Diem Plus are trademarks of Per Diem Plus, LLC.

 

  1. IRS Rev. Proc. 2011-47
  2. IRC Section 274(n)
  3. Notice 2013-65
  4. Reg. Section 1.274-5(c)(2)(iii)
  5. IRC Section 162(a)(2)
  6. Rev. Rul. 75-432
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