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Association Urges Treasury to Update Guidance on Employee Travel Expenses

OCT. 8, 1998

Association Urges Treasury to Update Guidance on Employee Travel Expenses

DATED OCT. 8, 1998
DOCUMENT ATTRIBUTES
  • Authors
    Severn, Charles R.
  • Institutional Authors
    National Conference of State Social Security Administrators
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    business expense deduction, living expenses away from home
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 98-31808 (3 pages)
  • Tax Analysts Electronic Citation
    98 TNT 209-15
====== SUMMARY ======

Charles R. Severn of the National Conference of State Social Security Administrators, Boise, Idaho, has urged Treasury to update its guidance on the amount of time an employee may be considered "temporarily away from home." According to Severn, the IRS issued temporary guidance on the issue in 1993 and promised to release additional guidance that would address questions and concerns raised by commentators. Since then, he says, no additional guidance has been released and the tax consequences of accepting temporary or indefinite assignments remain unclear. As a result, state and local governments are having a difficult time persuading employees who perform public safety jobs, such as disaster relief, to accept temporary or indefinite assignments away from home.

To correct the problem, Severn suggests changes to the IRS's existing guidance. Those changes include (1) eliminating the nature of the job assignment criteria; (2) providing that a temporary assignment will qualify as a new assignment if it is 50 miles or more from the employee's most recent temporary assignment; and (3) specifying that breaks of a month or more qualify as the end of one assignment and the beginning of another.

====== FULL TEXT ======

October 8, 1998

Mr. Jonathan Talisman

 

Deputy Assistant Secretary

 

Office of Tax Policy

 

Department of the Treasury

 

1500 Pennsylvania Avenue NW

 

Washington, DC 20220

Dear Mr. Talisman:

[1] This letter requests your attention and support to address a serious guidance deficiency regarding Temporary Assignments Away From Home (TAAFR). The National Conference of State Social Security Administrators (NCSSSA), representing more than 80,000 state and local public employers through each state's social security administrator, is concerned that clarifying guidance has not been issued during the past six years.

[2] The following recaps a brief history of this issue and offers proposed guidance standards. We have also provided a factual case that was sent to the IRS seeking guidance. The result was five different responses.

[3] The Energy Policy act of 1992 amended IRC Section 162(a) that shortened the time an employee could be considered "temporarily away from home" to one year. As a result, the IRS Office of Chief Counsel released temporary guidance in Notice 93-29 and invited comments on issues raised by this notice. The employer community responded to 93-29 quickly, pointing out various areas requiring clarification and definition. The IRS informally responded that these concerns were valid and would be addressed either in a Question and Answer Advice or via regulations. To date no additional guidance has been issued, however.

[4] Since 1993, the NCSSSA has sought formal guidance via traditional IRS channels. The IRS, unfortunately, was unable to secure Treasury support via the annual IRS Work Plan process. As a direct result, state and local government employers continue to face serious repercussions that are tied to labor issues. For example, employees performing public safety jobs during natural disasters are reluctant to assume assignments that may be temporary or indefinite. Employees and labor unions require assurances of the tax implications of per diem items prior to accepting assignments.

[5] Public sector employers are charged with public health and safety. This responsibility assumes immediate and clear public focus during natural disasters such as hurricanes, floods, earthquakes, etc. The public expects state and local governments to meet these disasters during all phases from prevention to restoration. Disasters do not recognize geographical boundaries, nor fall upon the private sector employers for restoration. These disasters create an emergency environment over prolonged periods and, often, create subsequent or sequential new disasters as a result of the initial event.

[6] Public sector employers, as well as the employer community at large, must have guidance that addresses all applicable situations to achieve a high degree of voluntary compliance and proper employment tax withholding.

[7] The following is a factual example of a disaster based assignment which the NCSSSA received five different responses from IRS representatives across the nation. This is given as an example of the type of situations that government employers face daily.

[8] John Smith works for the state office of Emergency Services as a public safety engineer and is a disaster relief expert. On October 7, 1997 a major earthquake strikes causing a complete infrastructure disaster for a metropolitan area spanning five counties. The disaster area was more than 100 miles from John's headquarters.

[9] John is assigned to the largest city in the disaster area to perform immediate disaster relief; the duration of the assignment is unknown. John performs this task exclusively for one month. On the first day of his second month the disaster zone, John's superiors direct his [sic] to develop an intermediate recovery plan. He continues his initial assignment of immediate relief concurrently with the new assignment for two months. At the conclusion of his third month, John begins working exclusively on developing and implementing the intermediate recovery, which he does for 10 months. John's super- visor, at the end of the third month, believes he will be assigned to the disaster for eight months.

[10] In late November, 1998 13 months after the earthquake, a combination of the earthquake's damage and massive rains produce serious flooding in a sister community within the metropolitan area, in which John has been for 13 months --- about 10 miles from his temporary assignment. John is assigned to provide initial flood relief in this area by his superiors. At the time of this assignment John's supervisor projects the assignment will be for six months. After two months he returns to his home headquarters.

[11] The NCSSSA recommends the Treasury or the Internal Revenue Service issue a General Information Letter or further guidance, as indicated in Notice 93-29, by retaining the current one year criteria, eliminating the nature of the assignment criteria and adding two new criteria:

o THE CURRENT TIME TEST AS OUTLINED IN NOTICE 93-29 SHOULD BE

 

RETAINED. Employers understand the criteria and it provides a

 

workable standard. The nature of the job assignment,

 

especially in a disaster situation, provides more confusion

 

than guidance. Experience of the past six years has shown that

 

it is almost impossible to define the nature of the

 

assignment, especially when it does not result in a specific

 

measurable product. We recommend eliminating the nature of the

 

job assignment as a primary criterion.

o THE DISTANCE GUIDANCE SHOULD BE MODELED USING EXISTING IRS

 

RELOCATION/MOVING EXPENSE GUIDELINES. Under these guidelines

 

the employee's move to a new principal place of employment

 

must be at least 50 miles greater than the distance from the

 

employee's former residence than the employee's former

 

residence was from the prior principal place of employment. We

 

propose for any temporary assignment to qualify as a new

 

assignment, it should be a minimum of 50 miles from the most

 

recent temporary assignment undertaken by the employee and

 

wherein the employee's tax home does not change.

[12] NEW GUIDANCE SHOULD INCLUDE A "CLEAR BREAK IN SERVICE TEST". A review of a myriad of case law indicates that a minimum of a one-month break between assignments is workable. Various tax court rulings have affirmed that inconsequential breaks (a few days even several weeks) do not qualify as the end of one assignment nor the beginning of a new assignment. We recommend using a one-month break test: this will eliminate subjective and inconsequential breaks.

[13] Thank you for your attention to this matter. We look forward to hearing from you and securing viable guidance from your office. Please call me at (208) 334-2394 or David Barrow at (916) 322-8105 if you have questions or require additional information.

Sincerely,

Charles R. Severn, President

 

National Conference of State

 

Social Security Administrators

 

Boise, Idaho

cc: Donald C. Rohan, NCSSSA Vice-President

 

David Barrow, NCSSSA Government Affairs Committee

 

Jody Brewster, IRS:CC:DOM:IT&A

 

Judith Dunn, IRS:CC:DOM
DOCUMENT ATTRIBUTES
  • Authors
    Severn, Charles R.
  • Institutional Authors
    National Conference of State Social Security Administrators
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    business expense deduction, living expenses away from home
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 98-31808 (3 pages)
  • Tax Analysts Electronic Citation
    98 TNT 209-15
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