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Driver per diem report and trip summary

Which per diem method saves a fleet more money? Substantiated per diem saves a motor carrier the most money, since the fleet benefits are directly proportional to total per diem paid to drivers.  So how did cent-per-mile per diem become so popular in the trucking industry? Decades before the advent of telematics fleets adopted cent-per-mile per diem for because it was easy to calculate.  However, there is no correlation between the miles a driver travels and meal breaks.

Which per diem method do drivers prefer?

Drivers prefer substantiated special trucker per diem. Why? They eat 3 meals a day regardless of whether they drive 200 or 600 miles. The IRS introduced the Special Transportation Industry substantiated per diem to remedy this issue. In addition it simplified tax compliance for fleets by relying on nights away from home instead of miles traveled. It is also a more accurate reflection of anticipated meal expenses for drivers.


The most beneficial aspect of substantiated per diem to a motor carrier is that: 

  •  Substantiated method yields on average 27% more per diem savings than cent-per-mile or $1 for every $8 of per diem paid to driver over cent-per-mile.
  • The average fleet saves about $3,700 per driver in income and employment taxes and workers compensation.
  • A fleet employing 5 OTR drivers would save about $5,112 more with substantiated per diem than a $0.11 cpm per diem plan.

Use our Fleet Per Diem Benefit Calculator to learn how much your fleet can save with Per Diem Plus Fleets.


Will adding a per diem program enhance driver recruiting?

Adding an accountable per diem program for employee drivers is a sure-fire way to enhance driver recruiting and retention. Consider the following:

  • The typical over-the-road (OTR) driver averages 127,500 miles annually and is away from home 280 nights a year.
  • A driver would receive $18,480 under the substantiated method, but only $12,750 under a cent-per-mile.
  • Substantiated method yields on average 45% more per diem than cent-per-mile.
  • Substantiated can be earned during a 34-hour restart and unforeseen delays like detention, breakdowns, or weather.
  • The average driver will save an additional $1,126 - $1,467 in taxes over cent-per-mile.
driver annual tax savings from per diem

Both substantiated and cent-per-mile per diem must comply with the IRS substantiation by adequate records rules. According to the IRS, "a motor carrier must maintain lrecords to establish "time, place and location" for each per diem event". The Per Diem Plus FLEETS platform satisfies this requirement since it is maintained in such manner that each recording of an element of an expenditure is made at or near the time of the expenditure.

Document retention rules:

  • Per Diem Plus FLEETS utilizes a 4-year retention policy.
  • A motor carrier must retain driver ELD data for a minimum of 3 years from the filing date of the corporate tax return.

The transportation industry has been unique in its treatment of driver per diem for over 30 years. The substantiated per diem method saves a motor carrier more money than cent-per-mile method. While, substantiated and cent-per-mile per diem methods are IRS-compliant, both require a motor carrier to comply with the adequate records and document retention rules. 

Get in touch with the experts at Per Diem Plus today to discuss a smooth rollout for your system.

Per Diem Plus FLEETS is a configurable mobile application enterprise platform that automates administration of an IRS-compliant accountable per diem plan for truck drivers and fleets managers. No matter how big or small your company is, Per Diem Plus has a solution for you.




About Per Diem Plus FLEETS

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 for iOS and Android that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups to substantiate away-from-home travel.


This article was written by Mark W. Sullivan EA, Tax Counsel for Per Diem Plus, who has over a decade of experience advising trucking companies on per diem issues. Prior to starting a private practice in 1998, 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.  Questions? Contact Mark W. Sullivan, EA.

Copyright 2019-2022 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®

Disclaimer: This article is for information purposes only and cannot be cited as precedence or relied upon in a tax dispute before the IRS.

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® 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 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

About the Author

Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs. In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA 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.
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