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.
- 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
- Direct driver subscription
- (Google Play & iTunes)
- White label
- Free install with driver ID login
- Web app management
- Cloud storage
- Customize per diem rate[iv]
- API integration
- Per diem solution
- As little as $0.75 / month / active user
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.
What Is The Cost To Fleet
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.
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.
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.
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.