Can miliage for this type of meeting be excluded from income?

[swalsh411]

What is the name of your state (only U.S. law)? Federal

Employees who normally work at location A are being asked to attend a voluntary "awards lunch" at location B during the middle of the day. (Approx 1 PM to 4PM). Location B is about 20 miles from their normal work location. Management has decided to reimburse for mileage at the standard company rate for travel to and from this event. Is this taxable? It is a business function, but voluntary, and occurs during the normal work day. IRS Section 162 states:

Qualifying expenses for travel are excludable if they are incurred for temporary travel on business away from the general area of the employee’s tax home. In order to be excludable as reimbursements, the travel must be temporary and be substantially longer than an ordinary day's work, requiring an overnight stay or substantial sleep or rest. IRC §162(a)(2)

Is there any other IRS rules to consider? I believe that mileage reimbursement for this meeting needs to be run through payroll and included in income.

PS. This is NOT homework. The guy who normally gets asked these questions is on vacation so it fell to me.

 

[LdiJ]

What is the name of your state (only U.S. law)? Federal

Employees who normally work at location A are being asked to attend a voluntary "awards lunch" at location B during the middle of the day. (Approx 1 PM to 4PM). Location B is about 20 miles from their normal work location. Management has decided to reimburse for mileage at the standard company rate for travel to and from this event. Is this taxable? It is a business function, but voluntary, and occurs during the normal work day. IRS Section 162 states:

Qualifying expenses for travel are excludable if they are incurred for temporary travel on business away from the general area of the employee’s tax home. In order to be excludable as reimbursements, the travel must be temporary and be substantially longer than an ordinary day's work, requiring an overnight stay or substantial sleep or rest. IRC §162(a)(2)

Is there any other IRS rules to consider? I believe that mileage reimbursement for this meeting needs to be run through payroll and included in income.

PS. This is NOT homework. The guy who normally gets asked these questions is on vacation so it fell to me.

The bolded really doesn't apply to business miles. Someone could drive all over their city for business purposes, never be very far from home, but be able to claim business miles. The bolded really applies to other travel expenses. (hotel, meals, airfare etc)

 

[tranquility]

Strictly speaking, I'm not sure that mileage for a voluntary awards meeting would be an ordinary and necessary expense of the business. Necessary being the difficulty. However, I'd probably claim it as de minimus employee benefit.

 

[swalsh411]

I didn't think cash could ever be de minimus.

 

[tranquility]

I didn't think cash could ever be de minimus.

While I agree, is it cash or is it travel?

The whole thing is a little messy. The company clearly will want to deduct the money and the employee clearly will not want it to be income to them. All this for a voluntary awards banquet no one is required to attend. Yet, we know we can't "gift" an employee money. When you get down to it, figuring out the proper treatment may take a little depending on what the actual facts are. Personally, I'd say it's income to the recipient unless we can find an exception. My exception is de minimus. If I have an employee get donuts for a meeting and give her money for them and the mileage there is it going on her W-2?

 

[justalayman]

would it not simply be added to the net income as a mileage reimbursement? (presuming it does not not exceed the IRS allowable mileage rate)

I know how some of my employers had dealt with the issue.

 

[tranquility]

would it not simply be added to the net income as a mileage reimbursement? (presuming it does not not exceed the IRS allowable mileage rate)

I know how some of my employers had dealt with the issue.

Reimbursement is not income and what is the allowable mileage rate for employees going to a completely voluntary awards banquet?

 

[LdiJ]

Reimbursement is not income and what is the allowable mileage rate for employees going to a completely voluntary awards banquet?

I suspect that its one of those voluntary things that isn't really voluntary...otherwise the employer would not be "encouraging" the employees to go by reimbursing their mileage.

 

[tranquility]

I suspect that its one of those voluntary things that isn't really voluntary...otherwise the employer would not be "encouraging" the employees to go by reimbursing their mileage.

THEN, we have no problem.....well except for the hours the employees are not getting paid for attending.