I had an audit yesterday for a Truck Driver. Among other issues his M&E was being examined. I had used the $52/day transportation worker rate which was easily substantiated by his log books.
The auditor mentioned in passing that the IRS was currently conducting a CIP (compliance initiative project) for Railroad Employees with high employee business expenses and this project was being expanded. He provided me a copy of a FAX he received which I will exert below;
The main audit issue is that the trainmen (Engineer, Conductor and Fireman) were using the $52/day rate and they were not entitled to it. The rate is referred to in Section 4 of Rev Proc 2008-59. The rate is not allowed for them because they “usually” don’t travel to localities with differing GSA per diem rates. Therefore they should be using the $39/day rate which is only 50% deductible not 80%.
They also noted that the employees were not claiming the reimbursements received from the EBE on the form 2106.
If you prepare returns for Trainmen you might want to make note of this. I expect some very unhappy railroaders this year.
The auditor mentioned in passing that the IRS was currently conducting a CIP (compliance initiative project) for Railroad Employees with high employee business expenses and this project was being expanded. He provided me a copy of a FAX he received which I will exert below;
The main audit issue is that the trainmen (Engineer, Conductor and Fireman) were using the $52/day rate and they were not entitled to it. The rate is referred to in Section 4 of Rev Proc 2008-59. The rate is not allowed for them because they “usually” don’t travel to localities with differing GSA per diem rates. Therefore they should be using the $39/day rate which is only 50% deductible not 80%.
They also noted that the employees were not claiming the reimbursements received from the EBE on the form 2106.
If you prepare returns for Trainmen you might want to make note of this. I expect some very unhappy railroaders this year.
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