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] While the media is awash with articles covering the ELD mandate and tax reform, everyone has overlooked the impact on tax compliance recordkeeping obligations to substantiate trucker per diem. Everyone but Per Diem Plus.
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. 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.
Fleets and self-employed drivers retain certain records required by FMCSA to comply with DOT regulations, but prudently discard ELD backups after 6 months. However, the IRS only accepts driver logbooks as proof of overnight truck driving trips to substantiate per diem[ii]. Contrary to popular belief trip sheets, mileage logs or settlement statements do not fulfill these statutory requirements. Therefore, fleets adding an accountable per diem program and self-employed drivers face a Catch-22; shield themselves from FMCSA exposure or risk the wrath of IRS auditors.
ELD / AOBR backups are straightforward until one considers an e-log for a one driver for a single week can be 20-plus pages or 1,000 pages annually and requires manual reconciliation to establish qualifying overnight truck driving trips. Per Diem Plus was designed to resolve this regulatory Catch-22 by separating FMCSA and IRS retention rules.
Per Diem Plus Fleets is the only IRS-compliant mobile application cloud-based solution that replaces logbooks by automating per diem tracking for travel in the USA and Canada. Users can run an itemized “date, place and amount” report for a week, a month or even a year in less than 30 seconds. Per diem and expenses data and receipts are instantly available for 4 years.
Try Per Diem Plus for free for 30 days – no Credit Card required.
[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.