Mileage, Unreimburse Employee

[geekgirldany]

I have a client that is working for a company as a home inspector. He never goes to the corporate office location. They call and give him the inspection(s) for the day. He leaves from his home goes to do the inspections and comes back. He is a W-2 employee. He does have a home office.

I told him I thought the mileage for travel would be deductible but I wanted to double check because I knew there was something about not having a regular place of work. So after some research I found:

"No regular place of work. If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can de-duct daily transportation costs between home and a temporary work site outside that metropol-itan area.
Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. You cannot deduct daily transportation costs between your home and temporary work sites
within your metropolitan area. These are nonde-ductible commuting expenses."

So how does one determine the metropolitan area? I understand the city limits. What is considered the suburbs... would that be the county they live in?

Thank you for any help
DAny

[Jesse]

I don't have an answer. Case by case facts and circumstances? Darn confusing - I did a google search and these cases caught my attention.

http://www.lawprofessorblogs.com/taxprof/linkdocs/2005-4846-1.pdf

[Davc]

Is the home office required as a condition of employment or just the TP's choice?

[Nashville]

Philadelphia

I think the landmark case which upheld the IRS on their "metropolitan area" was Philadelphia. A service technician drove every day to a different location, even some in New Jersey, and was denied deductible mileage anywhere within the Philadelphia metro area.

Hardly fair. The entire metro area is 60 miles long and 40 miles wide. But IRS won this one.

Tax planning suggestion for Danys client. Turn in a reimbursement mileage claim to his employer under an accountable plan, and have his employer simply reimburse him at a fair rate not to exceed IRS rate. Taxwise, this would work for everyone, even if the guy had to take a small cut in base pay. i.e. if the reimbursement plan is expected to cost the employer some $2000, simply cut his pay rate $1.00 per hour. He pays less in tax, his employer pays less in tax, and the reimbursement is not taxable to the employee.

[JG EA]

How does no regular place of work and this reconcile?
TTB 10-4

Use of a vehicle qualifies as business use under all of the following:
• Getting from one workplace to another in the course of a taxpayer’s
business or profession when the taxpayer is traveling
within the city or general area that is the taxpayer’s tax home.
• Visiting clients or customers.
• Going to a business meeting away from the taxpayer’s regular
workplace.
• Getting from home to a temporary workplace when the taxpayer
has one or more regular places of work. These temporary
workplaces can be either within the area of the taxpayer’s tax
home or outside that area.

(Of course not taking into consideration the home office which should automatically kick in mileage - if in this case was required.)

So, visiting clients, you think, would be different than going and doing a different job each day. So, a salesman's miles would be fine with or without a home office; and doing a different job each day - no home office - within the same metropolitan area would not be deductible miles? I notice the visiting clients does not have the stipulation "regular work place".

I kind of look at it that way. But as said F&C prevails.

So, clients that do not have OIH and go out on building projects for C or W-2 within the Met Area - not deductible unless 2 in one day and then the miles between the two are deductible.(They have a regular work place by definition - in the Met area.)

Clients that go out and make sales calls and deliveries without OIH have the between miles anyway and also have those miles because of what they are doing. Regular place of business doesn't enter in to the picture with them.

[Gretel]

I think the the main question is if he has a qualified home office and if this home office is a requirement by employer (in writing). All of his visits to clients then would be deductible. If the home office doesn't qualify, then all of the other issues come into play.

This is such a confusing subject. I hate it every time it comes up again.

[Nashville]

Tax Home

Gretel I think (from the Philadelphia case) that he does have a tax home, and that his home is defined to be the entire metropolitan area. He deducts mileage whenever he leaves his tax home. If he never leaves Metropolis or its suburbs, he never has deductible mileage.

The worst possible scenario is for there to be no tax home whatsoever. He is then defined as a transient, with no deductible mileage whatsoever.

[ChEAr$]

I think the the main question is if he has a qualified home office and if this home office is a requirement by employer (in writing). All of his visits to clients then would be deductible. If the home office doesn't qualify, then all of the other issues come into play.

This is such a confusing subject. I hate it every time it comes up again.

I sure do agree with you there, Gretel.

As for "metropolitan area", down in these parts, I use 35 miles radius since that encompasses about 99% of clients' work locations.

But for a larger area, e.g. Philadelphia, IRS considers it much bigger. Wouldn't it be
SO much simpler is IRS would just come right out and define what radius surrounds
a metropolitan area, regardless of size of major city?

As for this particular employee's "home office", why does he even need one? It sure
can't be the focal point of his major activities, except for maybe an hour a day using computer to input information and email appraisals to home office. But even that might
pass the test, but ONLY if employer requires home office as condition of employment.

[geekgirldany]

I want to thank you all for taking the time to respond to this most confusing subject.

I am pretty sure his employer does NOT make him have a home office. He just uses it to log in information for the employer through his computer.

So that brings me to this...the whole county is included in the Atlanta Metro Area. In all probably around 9 counties. So if my client goes outside of the Atlanta Metro Area... deductible... if not then non deductible.

Doesn't seem right.

[Nashville]

Not Right

It is not right. Especially if the "Metro Area" now includes Forsyth County. The first time I ever went to Forsyth County no family ever had more than one car and the two principle industries were farming and logging.

The reason IRS does not specify any radius is because they would create a "safe harbor." And that would stop them from running rampant using extended arguments purporting "facts and circumstances."

[geekgirldany]

Yeah I really can't believe we are part of it either. Who would have thought? The south end of Forsyth County has grown so much I really think that was the reason it was included. Crazy! The IRS should give more of a concrete answer to this.

Well I guess I will be giving my client a call. I really appreciate the help.

Dany

[Black Bart]

I agree.

It is not right...The reason IRS does not specify any radius is because they would create a "safe harbor." And that would stop them from running rampant using extended arguments purporting "facts and circumstances."

Looking back at that "Your Tax Dollars at Work" thread and BHoffman's link to the IRS conference report which said "Preparers use lower levels of ethical reasoning at work than in a social context," I'd like to have those high-powered psychologists examine IRS' ethical reasoning "at work".

If those shrinks knew anything about taxes, wonder what they'd think of the IRS policy on this very subject -- "metropolitan areas"? Would they conclude IRS' interest was in money or ethics?