PDP For Fleets - 3 Months Free

January 29, 2018

Trucker Per Diem: FMCSA vs IRS Creates a Catch-22

Mark Sullivan- Per Diem Plus
Mark W. Sullivan, EA
Mark is our transportation industry expert and has nearly two decades of experience advising clients on IRS accountable per diem programs. 
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. PDP Fleets Product Sheet

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 [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.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram