- 29 -
(hereinafter referred to as the specified Federal M&IE rate).20
Among the five factors enumerated in section 4.02 of the Revenue
Procedures that may trigger this consequence, the fifth factor is
the focus of the dispute here. It requires a per diem allowance
to be treated as paid only for M&IE if “the allowance is computed
on a basis similar to that used in computing the employee’s wages
or other compensation (e.g., the number of hours worked, miles
traveled, or pieces produced).” Rev. Proc. 96-28, sec. 4.02,
1996-1 C.B. at 688. (Hereinafter, this provision is sometimes
referred to simply as the fifth factor.)
On brief, petitioner suggests that the fifth factor is
invalid because it conflicts with certain regulations under
section 62(a)(2), regarding the treatment to employees of
reimbursed expenses under so-called accountable plans.21
20 Under the Revenue Procedures, the Federal per diem rate
for the locality of travel is the amount set forth in the Federal
Travel Regulations, as contained in 41 C.F.R., ch. 301, app. A,
as amended. See Rev. Proc. 96-28, sec. 3.02, 1996-1 C.B. at 687.
The Federal Travel Regulations, as in effect for the years at
issue, provide various M&IE rates (ranging from $26 to $38) for
over 800 specified localities in the continental United States;
all other locations in the continental United States are subject
to the lowest M&IE rate of $26. See 41 C.F.R., ch. 301., app. A
(1996). As previously noted, under the simplifying convention of
sec. 4.04(2) of the Revenue Procedures, a qualifying taxpayer in
the transportation industry may treat $32 as the Federal M&IE
rate for all localities of travel in the continental United
States.
21 Sec. 62(a)(2)(A) permits favorable tax treatment (e.g.,
exclusion from the employee’s gross income and exemption from
withholding requirements and the payment of employment tax) with
respect to reimbursements of business expenses that payors make
(continued...)
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011