An innovative GPS tracking system for the Transportation Industries that can save you thousands of tax dollars

Frequently Asked Questions

Table of Contents


For Employers



Just How Easy is Dozing 4 Dollars to Use? Top

Do you know the IRS has been offering your long haul fleet owners/operators and long haul drivers tax incentives totaling more than $10,000 annually since 1990 for just storing and then retrieving prior GPS derived locations, but just how easy is it to use?

Almost all the legally required effort needed to qualify for these IRS encouraged savings is already being done by your GPS Tracking Company.  Your GPS Tracking Company is already independently documenting:the following:.

  1. Objectively recording each vehicle’s location over a thousand times per day of each ping – the “time” requirement demanded by these IRS Travel Revenue Procedures.
  2. Objectively recording each vehicle’s exact location over a 1,000+ times per day anywhere on the Earth – the “place” requirement demanded by these IRS Travel Revenue Procedures.

Why can’t a trucking company simply use the popular “Cents Per Miles driven” to calculate allowable per diem? Top

Many trucking fleets have been relied upon the “cents per miles driven” method to compute the allowable daily meal per diem.  The business rationale used by those using this methodology is easy to understand:

  1. Recording the number of daily miles driven is easy to understand, calculate and record.
  2. Multiplying the number of daily miles driven times a cents/mile rate is also easy to understand, calculate, and record.
  3. Teaching this methodology to others is straightforward.
  4. This methodology does not require the purchase of outside vendor software to calculate or document.

So if this methodology is so straightforward and easy to use, then why shouldn’t truckers keep using it?


Why Shipping Companies Should Be Willing to Share Out-of-Date GPS Data with Their Drivers? Top

Occasionally a Shipping Company will Express Puzzlement in being asked to Share Old GPS Pinged Data with their Independent Drivers

Do you know the IRS has been offering your long haul Independent Drivers tax incentives totaling more than $14,000 annually since 1990 just because you have been recording and then storing out-of-date GPS derived locations?

Shipping Companies choosing to use Independent Truck Drivers are already assuming part of the driver’s compensation is going to be used by these Independent Truck Drivers to purchase meals while traveling on behalf of the Shipping Company so these Shipping Companies have already adjusted their compensation upwards to reflect this "already hidden per diem allowance".  

 


I've Been Using a Tracking Service for 2014 - Can I Go Back to Get this Full Year? Top

2014 is now almost 8 months old, if I sign up now, have I lost the ability to get these tax savings starting back on January 1, 2014?

 

Your GPS tracking program has already recognized the value of storing your prior GPS pinged locations and can, with your permission, upload all of your stored travel locations going back to the start of the year to Dozing 4 Dollars.


I've Been Using a Tracking Service for Years - Can I Go Back to Prior Years?Top

Dozing 4 Dollars™  is currently capable of computing your travel deductions for the years 2010, 2011, 2012, 2013 and 2014.  If previous years are determined to also be advantageous, just contact our office.


Must You Be a Truck Driver to Claim These Travel Deductions? Top

The legal definition of “travel” means being away from your home business location long enough to require “rest or sleep”.   Nothing in the law says you must be a truck driver.


I've Been Notified I'm Being Audited for Claimed Travel Expenses - Can Dozing 4 Dollars Help Me? Top

I have been using a GPS Tracking Program and was just notified that I am now being audited by either the IRS or a state agency for claiming travel expenses – how can Dozing 4 Dollars™  help me now?

Dozing 4 Dollars™  is currently capable of computing your travel deductions for the years 2010, 2011, 2012, 2013 and 2014 for anywhere in Continental United States or Canada.  Additional locations can also be added if necessary.  Just because you did not originally claim and/or properly document your travel deductions on your original tax return, does not prevent you from now taking advantage of our Dozing 4 Dollars™  program.  Remember, your GPS Tracking Program already timely recorded your travel which is the primary requirement for properly claiming travel deductions.


For Accountants, CFO, outside CPAs



Must You Be a Truck Driver to Claim These Travel Deductions? Top

The legal definition of “travel” means being away from your home business location long enough to require “rest or sleep”.   Nothing in the law says you must be a truck driver.

While long haul drivers routinely do qualify for these “travel” deductions because they are usually away long enough to require “rest or sleep” before returning, any person whose job takes them away long enough to require “rest or sleep” before returning  should also qualify.

Examples may include traveling salespersons and field supervisors.  If your job includes both local and long distance jobs, our program is capable of determining which days should qualify for each vehicle as long as a GPS is installed.

Also included should be other “Transportation Industry Employees” which includes commercial airline or cargo pilots, interstate bus drivers, merchant sailors, and locomotive engineers and conductors.

Once we are notified of your particular job duties, Dozing 4 Dollars™  will correctly identify your job duties and will correctly highlight the appropriate supporting documents.

If you would like to discuss your particular work situation in more detail, please CONTACT OUR OFFICE.


How is Travel Defined for Tax Purposes - I'm Confused? Top

The definition of travel as defined by the United States Supreme Court means being away from your usual starting location long enough to require the driver to “rest or sleep” before return back to your usual starting location.   Thus, you must be “dozing” to earn per diem “dollars”.

 

Distance is not an issue, just the requirement to “rest or sleep”.  Again, you must be “dozing” to earn per diem “dollars”.

 

For example, a sales representative that routinely flies once daily between Boston and Buffalo which takes 4 hours for the round trip for repeated routine meetings is not automatically “traveling” because this employee goes home each night to “rest or sleep”, whereas a long haul truck driver going between the same two cities is traveling because they must stop to “rest or sleep” before returning home.


Can You Provide the Legal Background to these 25 Travel Revenue Procedures? Top

Show me the specific IRS Travel Revenue Procedures that allow these automatic travel deductions without receipts

 

Here are the 25 IRS Travel Revenue Procedures ("Rev Proc") published starting back in 1989:

     Specific Reference           Tax Period   

     25   Rev Proc 2011-47       01/01/12  to  12/31/14

     24   Rev Proc 2010-39       01/01/11  to  12/31/11

     23   Rev Proc 2009-47       01/01/10  to  12/31/10

     22   Rev Proc 2008-59       01/01/09  to  12/31/09

     21   Rev Proc 2007-63       01/01/08  to  12/31/08

     20   Rev Proc 2006-41       01/01/07  to  12/31/07

     19   Rev Proc 2005-67       01/01/06  to  12/31/06

     18   Rev Proc 2005-10       01/01/05  to  12/31/05

     17   Rev Proc 2004-60       09/01/04  to  12/31/04

     16   Rev Proc 2003-80       01/01/04  to  08/31/04

     15   Rev Proc 2002-63       01/01/03  to  12/31/03

     14   Rev Proc 2001-47       01/01/02  to  12/31/02

     13   Rev Proc 2000-39       01/01/01  to  12/31/01

     12   Rev Proc 2000-9        01/01/00  to  12/31/00

     11   Rev Proc 98-64               01/01/99     to  12/31/99

     10   Rev Proc 97-59               01/01/98     to  12/31/98

      9   Rev Proc 96-64               01/01/97     to  12/31/97

      8   Rev Proc 96-28               04/01/96     to  12/31/96

      7   Rev Proc 94-77               01/01/95     to  03/31/96

      6   Rev Proc 93-50               01/01/94     to  12/31/94

      5   Rev Proc 93-21               03/12/93     to  12/31/93

      4   Rev Proc 92-17               01/01/92     to  03/11/93

      3   Rev Proc 90-60               01/01/90     to  12/31/91

      2   Rev Proc 90-38               01/01/89     to  12/31/89

      1   Rev Proc 89-67               01/01/89     to  12/31/89

 

By way of introduction, IRS Revenue Procedures are written by the IRS National Office and conveys IRS policy to both the public and to its own IRS employees.  This is the IRS official policy that can be relied upon in Tax Court.  IRS Auditors are forbidden from taking positions contrary to a Revenue Procedure.  

 

One set of Revenue Procedures most readers are aware of are the "deemed substantiated" auto mileage rates that can be claimed on tax returns without having to prove your actual mileage costs to anyone. 

 

These Revenue Procedures begin as follows:

"1. Purpose

This revenue procedure updates Rev. Proc. 2008-59, 2008-41 I.R.B. 857, and provides rules under which the amount of ordinary and necessary business expenses of an employee for lodging, meal, and incidental expenses, or for meal and incidental expenses, incurred while traveling away from home are deemed substantiated under § 1.274-5 of the Income Tax Regulations when a payor (the employer, its agent, or a third party) provides a per diem allowance under a reimbursement or other expense allowance arrangement to pay for the expenses."

 

These 25 IRS Travel Revenue Procedures in Section 3.03 "Flat rate or stated schedule" encourages transportation employers to provide meal per diems to "over-the-road truck drivers":

"3.03. Flat rate or stated schedule.

"(1) In general. Except as provided in section 3.03(2) of this revenue procedure, an allowance is paid at a flat rate or stated schedule if it is provided on a uniform and objective basis with respect to the expenses described in section 3.01 of this revenue procedure. The allowance may be paid with respect to the number of days away from home in connection with the performance of services as an employee or on any other basis that is consistently applied and in accordance with reasonable business practice. Thus, for example, an hourly payment to cover meal and incidental expenses paid to a pilot or flight attendant who is traveling away from home in connection with the performance of services as an employee is an allowance paid at a flat rate or stated schedule. Likewise, a payment based on the number of miles traveled (such as cents per mile) to cover meal and incidental expenses paid to an over-the-road truck driver who is traveling away from home in connection with the performance of services as an employee is an allowance paid at a flat rate or stated schedule."

 

Most trucking employers do not currently provide their drivers a separately computed meal per diem allowance because employers incorrectly believe this allowance will (1) only increase their labor overhead costs and (2) increase the paperwork aggravation to keep track of this tedious data.  This is where the GPS derived computerized information comes in.  

 

Trucking employers are already anticipating that part of the drivers’ salary is going to be used to purchase over the road meals and have adjusted the drivers’ salary upwards to reflect this "already hidden per diem allowance".   These 25 IRS Travel Revenue Procedures tells employers the meal per diem is not subject to payroll taxes or workman compensation by the employer, and not taxable as wages by your employees.  Quoting Section 7:

"7.03. An employee is not required to include in gross income the portion of a per diem allowance received from a payor that is less than or equal to the amount deemed substantiated under the rules provided in section 4 or 5 of this revenue procedure if the employee substantiates the business travel expenses covered by the per diem allowance in accordance with section 7.01 of this revenue procedure. See § 1.274-5T(f)(2)(i). If the remaining requirements for an accountable plan provided in § 1.62-2 are satisfied, that portion of the allowance is treated as paid under an accountable plan, is not reported as wages or other compensation on the employee's Form W-2, and is exempt from the withholding and payment of employment taxes. See §1.62-2(c)(2) and (c)(4)."

In 2000, the author of these two U.S. Patents twice challenged the IRS in Tax Court in Washington D.C. on the reliance by ordinary transportation employees to claim the generous benefits encouraged by these 25 IRS Travel Revenue Procedures.  Quoting from the Marin Johnson Tax Court decision ("Johnson") where the Court agreed by writing:

 

"We [U.S. Tax Court] disagree with respondent's [IRS] assertion that petitioner [Marin Johnson] must introduce into evidence actual receipts of his incidental expenditures in order to deduct them.  As we read Rev. Proc. 96-28 [number 8 of now 23 revenue procedures], 1996-1 C.B. 686, and its progenitors, one of the primary purposes of those[now 25 travel] revenue procedures is to allow taxpayers to deduct a set amount of travel expenses incurred away from home in lieu of maintaining written records to substantiate the actual amount. See also sec. 1.274-5T(j), Temporary Income Tax Regs., 50 Fed. Reg. 46032 (Nov. 6, 1985) ("the Commissioner may establish a method under which a taxpayer may elect to use a specified amount or amounts for meals while traveling in lieu of substantiating the actual cost of meals")We [the U.S. Tax Court] note, however, that petitioner [MarinJohnson] has introduced into evidence records which meet the time, place, and business purpose requirements of sec. 1.274- 5T(b)(2), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985), as to his incidental expenses. Those records show clearly: (1) The dates of petitioner's departure for and return from each city that he visited while away from home (the time requirement), (2) the cities or points of travel (the place requirement), and (3) the business nexus between his employment and his travel (the business purpose requirement). See id.; see also 41 C.F.R. sec. 301-7.2(a)(2) (1994 & 1996)."  Johnson pg 24

 

By way of example, a typical long haul driver that travels between San Diego and Boston can easily travel through 40,000 distinct locations in just one year.  So how does someone compute what specific per diem allowance to use on any given day when a truck is perpetually moving?  These Revenue Procedures provide the legal guidance to answer this question by writing in Section 6:

"6.01. In general. The federal per diem rate and the federal M&IE rate described in section 3.02 of this revenue procedure for the locality of travel will be applied in the same manner as applied under the Federal Travel Regulations, 41 C.F.R. Part 301-11 (2007), except as provided in sections 6.02 through 6.04 of this revenue procedure.

6.02. Federal per diem rate. A receipt for lodging expenses is not required in determining the amount of expenses deemed substantiated under section 4.01 or 5.01 of this revenue procedure. See section 7.01 of this revenue procedure for the requirement that the employee substantiate the time, place, and business purpose of the expense."

With Section 6.01 demanding we follow the Federal Travel Regulations ("FTR") for determining the proper daily derived per diem rate, let me introduce you to  FTR § 301-11.102 "What is the applicable M&IE maximum?  "M&IE" means "Meals & Incidental Expenses".  FTR § 301-11.102 says if lodging is not required, "you can claim the highest M&IE rate applicable when multiple locations are involved."

 

Until July 2010, the tedium of tracking 40,000 annual locations for each truck was too tedious for anyone to economically undertake just to save several thousand dollars.   On July 20, 2010 the U.S. Patent Office finished six years of extensively testing of Dozing 4 Dollarsto accomplish this very task and awarded us our second U.S. Patent numbered 7,761,333.  This patent gives Dozing 4 Dollars   the exclusive legal right to merge our newest Patent 7,761,333 which derives travel locations by use of GPS locations with our previous U.S. Patent 6,978,254 dated December 20, 2005, which computes the per diem allowed for each of these 40,000 annual locations for roughly a dollar per day per vehicle.  Quoting from Dozing 4 Dollars newest  U.S. Patent 7,761,333:

 

"A system for truckers and bus drivers includes a GPS tracking system that continuously provides vehicle locations to the system for calculation of per diem expense allowances when coupled with a daily vehicle use table and receiver code and vehicle number correlation table."  U.S. Patent 7,761,333

 

For 2013 and later, the IRS announced Publication 1542 will no longer be published so the IRS now links taxpayers to the GSA Per Diem Rates, which sets the daily per diem rates that you can use to lower an employees taxable daily wages ranges from a high of $71/day for high-cost cities like Los Angeles, Chicago, New York, etc to a lowest rate of $46/day.  For transportation workers, these same 25 Travel Revenue Procedures state for 2014, IRS Rev Proc 2011-47 Section 4.04(3) "Transportation Industry Rates" says the overall annual transportation rate should NEVER BE LOWER than $59/day.

 

For 2012, IRS Publication 1542 "Per Diem Rates" - Table 4 sets the daily per diem rates that you can use to lower an employees taxable daily wages ranges from a high of $71/day for high-cost cities like Los Angeles, Chicago, New York, etc to a lowest rate of $46/day.  For transportation workers, these same 25 Travel Revenue Procedures state for 2012, IRS Rev Proc 2011-47 Section 4.04(3) "Transportation Industry Rates" says the overall annual transportation rate should also NEVER BE LOWER than $59/day.


Can I See the Math Computation Used in Your Example? Top

These Travel Revenue Procedures say that by using these preapproved daily per diem rates, long haul drivers are not subject to either Federal Income Tax withholding or Social Security Tax withholding on these per diem rates which means Workman’s Comp Insurance will also proportionately shrink by using these federally approved daily rates that can never be lower than $59 and typically average significantly higher than $60/day in the U.S. and $120/day in Canada.

Using an example of a typical long haul driver that’s traveling for 250 days/year with 85% time in the U.S. and 15% in Canada the federal tax savings + lower workman’s comp insurance annual savings exceeds $9,000 if only using the lowest permitted $59/day domestic meal rate for each and every long haul driver.  If this same driver also incurred lodging expense just 10% of his travel days the automatic annual savings jumps to over $12,000 for each and every long haul driver.  If this driver also lives in a state with a state income tax, then the annual savings jumps to $14,000 for each and every long haul driver.  A long haul employer with just 20 drivers using this scenario saves over $280,000 each year.  Many long haul drivers actually travel more than 250 days/year so their annual expected savings should be higher.

Tax = Federal Taxes = 28% Fed Inc Tax + 21% (Fed Soc Security Taxes + FUTA  + State SUTA) = 49%

WC = Workman’s Comp Rate Assumed = 10%

250 days x 85% Assumed % = 212 days x $59/day x 49% Tax  = $ 6,125

250 days x 85% = 212 days x $59 =  $12,500 x 10% WC      = $ 1,250

250 days x 15% Assumed % =  38 days x $115 x 49% Tax     = $ 2,125

250 days x 15% =  38 days x $115 = $ 4,370 x 10% WC      = $   430

Computed Tax + WC Payroll Savings – Just Meals             $ 9,930

Now assuming lodging incurred 1 in 10 travel days:

250 days x 85% Domestic x 10% = 21 days x $175 x 49% Tax = $ 1,800

250 days x 85% x 10% = 21 days x $175 Lodging x 10% WC   = $   350

250 days x 15% x 10% =  4 days x $275 x 49% Tax          = $   525

250 days x 15% x 10% =  4 days x $275 x 10% WC           = $   100

Computed Tax + WC + Lodging Savings                        $12,705

Now assuming driver lives in a state that also imposes an 8% state income tax:

250 days x 85% Assumed % = 212 days x $ 59/day x 8%              = $ 1,000

250 days x 15% Assumed % =  38 days x $115/day x 8%              = $   350

Total Anticipated Savings under these assumptions                = $14,055

                                                                   =======


Can I See the Math Computation Savings for Both Employer vs Employee Used in Your Example? Top

These Travel Revenue Procedures say that by using these preapproved daily per diem rates, long haul drivers are not subject to either Federal Income Tax withholding or Social Security Tax withholding on these per diem rates which means Workman’s Comp Insurance will also proportionately shrink by using these federally approved daily rates that can never be lower than $59 and typically average significantly higher than $60/day in the U.S. and $120/day in Canada.

Using an example of a typical long haul driver that’s traveling for 250 days/year with 85% time in the U.S. and 15% in Canada the federal tax savings + lower workman’s comp insurance annual savings exceeds $9,900 if only using the lowest permitted $59/day domestic meal rate for each and every long haul driver.  If this same driver also incurred lodging expense just 10% of his travel days the automatic annual savings jumps to over $12,000 for each and every long haul driver.  If this driver also lives in a state with a state income tax, then the annual savings jumps to $14,000 for each and every long haul driver.  A long haul employer with just 20 drivers using this scenario saves over $280,000 each year.  Most long haul drivers actually travel more than 250 days/year so their annual expected savings should be even higher.

Tax = Federal Taxes + State SUTA Payroll Tax                 

Tax = Incl FUTA + SUTA  12% Fed Soc Security Taxes = Employer  12%

Tax = 28% Fed Inc Tax +  9% Fed Soc Security Taxes = Employee             37%

WC = Workman’s Comp Rate Assumed                   =           10%

                                                               22%        37%

                                                          Employer   Employee

                                                           Savings    Savings

250 days x 85% Assumed % = 212 days x $ 59/day x 22%     = $ 2,750

250 days x 85% Assumed % = 212 days x $ 59/day x 37%     =            $ 4,650

250 days x 15% Assumed % =  38 days x $115/day x 22%     = $   960

250 days x 15% Assumed % =  38 days x $115/day x 37%     =            $ 1,625

Computed Federal + WC = Meals Savings Only                 $ 3,710    $ 6,275

Now assuming lodging incurred 1 in 10 travel days:

250 days x 85% Domestic x 10% = 21 days x $175 x 22%     = $   800

250 days x 85% Domestic x 10% = 21 days x $175 x 37%     =             $1,375

250 days x 15% Canada   x 10% =  4 days x $275 x 22%     = $   240

250 days x 15% = 38 days x 10% = 4 days x $275 x 37%     =            $   425

Additional Savings if also using Preapproved Lodging Rate  $ 4,750    $ 8,075

Now assuming driver lives in a state that also imposes an 8% state income tax:

250 days x 85% Assumed % = 212 days x $ 59/day x  8%     =            $ 1,000

250 days x 15% Assumed % =  38 days x $115/day x  8%     =            $   350

Computed Total Savings under these assumptions           = $ 4,750    $ 9,425

                                                       ======    ======

Total anticipated savings under these assumptions $4,750 + $9,425 = $14,175


Can I See the Math Computation if I am Both the Owner & Only Driver? Top

These Travel Revenue Procedures say that by using these preapproved daily per diem rates, long haul drivers are not subject to either Federal Income Tax withholding or Social Security Tax withholding on these per diem rates which means Workman’s Comp Insurance will also proportionately shrink by using these federally approved daily rates that can never be lower than $59/day and typically average significantly higher than $60/day in the U.S. and $120/day in Canada.

Using an example of a typical long haul owner/driver that’s traveling for 250 days/year with 85% time in the U.S. and 15% in Canada the federal tax savings exceeds $8,000 if only using the lowest permitted $59/day domestic meal rate for owner/driver.  If this same owner/driver also incurred lodging expense just 10% of his travel days the automatic annual savings jumps to over $10,000.  If this owner/driver also lives in a state with a state income tax, then the annual savings jumps to $12,000.  Most long haul owner/drivers actually travel more than 250 days/year so their annual expected savings should be even higher.

Only change in generic computation for an owner/driver is no Workman’s Comp (WC) Insurance is required.

Tax = Federal Taxes = 28% Fed Inc Tax + 21% (Fed Soc Security Taxes + FUTA  + State SUTA) = 49%

250 days x 85% Assumed % = 212 days x $59/day x 49% Tax  = $ 6,125

250 days x 85% = 212 days x $59 =  $12,500 x 0% WC       = $     0

250 days x 15% Assumed % =  38 days x $115 x 49% Tax     = $ 2,125

250 days x 15% =  38 days x $115 = $ 4,375 x 0% WC       = $     0

Computed Tax + WC Payroll Savings – Just Meals             $ 8,250

Now assuming lodging incurred 1 in 10 travel days:

250 days x 85% Domestic x 10% = 21 days x $175 x 49% Tax = $ 1,800

250 days x 85% x 10% = 21 days x $175 Lodging x 0% WC    = $     0

250 days x 15% x 10% =  4 days x $275 x 49% Tax          = $   525

250 days x 15% x 10% =  4 days x $275 x 0% WC            = $     0

Computed Tax + WC + Lodging Savings                        $10,575

Now assuming driver lives in a state that also imposes an 8% state income tax for Meal Days Only:

250 days x 85% Assumed % = 212 days x $ 59/day x 8%            = $ 1,000

250 days x 15% Assumed % =  38 days x $115/day x 8%            = $   350

Total Annual Anticipated Savings for Owner/Driver              = $11,925

 

Now assuming driver lives in a state that also imposes an 8% state income tax for Lodging Days:

250 days x 85% x 10% = 21 days x $175 Lodging x 8%       = $   275

250 days x 15% x 10% =  4 days x $175 Lodging x 8%       = $    50

                                                           $12,250

                                                                   =======


Can I See the Math Computation if I am Both the Owner & Only Driver - Not Incorporated? Top

These Travel Revenue Procedures say that by using these preapproved daily per diem rates, long haul drivers are not subject to either Federal Income Tax withholding or Social Security Tax withholding on these per diem rates which means Workman’s Comp Insurance will also proportionately shrink by using these federally approved daily rates that can never be lower than $59/day and typically average significantly higher than $60/day in the U.S. and $120/day in Canada.

Using an example of a typical long haul non-incorporated owner/driver that’s traveling for 250 days/year with 85% time in the U.S. and 15% in Canada the federal tax savings exceeds $7,000 if only using the lowest permitted $59/day domestic meal rate for owner/driver.  If this same non-incorporated owner/driver also incurred lodging expense just 10% of his travel days the automatic annual savings jumps to $8,000.  If this non-incorporated owner/driver also lives in a state with a state income tax, then the annual savings jumps to over $9,000.  Most non-incorporated long haul owner/drivers actually travel more than 250 days/year so their annual expected savings should be even higher.

Only two changes in generic computation for a non-incorporated owner/driver is (1) no Workman’s Comp (WC) Insurance is required and (2) self employed drivers cannot use the typically higher pre-approved government lodging rates – self employed drivers must use their actual out-of-pocket lodging costs

Click here to read the U.S. Tax Court analysis discussing why non-incorporated self employed drivers cannot use the typically higher pre-approved government lodging rates.

Tax = Federal Taxes = 28% Fed Inc Tax + 15% (Fed Soc Security Taxes + 0% FUTA  + 0% State SUTA) = 43%

250 days x 85% Assumed % = 212 days x $59/day x 43% Tax  = $ 5,375

250 days x 85% = 212 days x $59 =  $12,500 x 0% WC       = $     0

250 days x 15% Assumed % =  38 days x $115 x 43% Tax     = $ 1,875

250 days x 15% =  38 days x $115 = $ 4,375 x 0% WC       = $     0

Computed Tax + WC Payroll Savings – Just Meals             $ 7,250

Now assuming lodging incurred 1 in 10 travel days:

250 days x 85% Domestic x 10% = 21 days x $60 x 43% Tax  = $   550

250 days x 85% x 10% = 21 days x $60 Lodging x 0% WC     = $     0

250 days x 15% x 10% =  4 days x $100 x 43% Tax          = $   175

250 days x 15% x 10% =  4 days x $100 x 0% WC            = $     0

Computed Tax + WC + Lodging Savings                        $ 7,975

Now assuming driver lives in a state that also imposes an 8% state income tax for Meal Days Only:

250 days x 85% Assumed % = 212 days x $ 59/day x 8%            = $ 1,000

250 days x 15% Assumed % =  38 days x $115/day x 8%            = $   350

Total Annual Anticipated Savings for Owner/Driver              = $ 9,325

Now assuming driver lives in a state that also imposes an 8% state income tax for Lodging Days:

250 days x 85% x 10% = 21 days x $ 60 Lodging x 8%       = $   100

250 days x 15% x 10% =  4 days x $100 Lodging x 8%       = $    25

                                                           $ 9,450

                                                                   =======


Can I See Why Self Employed Truckers Cannot Use Gov't Lodging Rates? Top

The IRS “deemed substantiated” meal rates are OK for self-employed drivers, but self-employed drivers cannot claim the government “deemed substantiated” lodging rates.  The listed lodging rates in the sample Dozing 4 Dollarstrucker package only applies to employeesnot to the self employed.   If this situation applies to you, discuss your particular situation with your Accountant, and then contact our office, Click Here

CLICK HERE to see our travel computations for self-employed drivers.

This legal issue was first raised in Tax Court in “Paul H Duncan v. Commissioner, TC Memo 2000-269” (“ Duncan ”) that published on 8/24/2000.

In Duncan, the taxpayer was a self employed over-the-road trucker who relied upon Rev Proc 93-50 which is one of the 25 Travel Revenue Procedures that we have discussed in more detail in another FAQ.  The Tax Court wrote in Duncan:

“It is uncontested that petitioner [taxpayer] maintained a log in which he recorded his hauling trips, including time, place, and business purpose. However, petitioner [taxpayer] did not keep records of the amounts of lodging expenses he incurred but instead relied on the per-diem rates to compute the amount of his lodging expenses. While section 4.01 of Rev. Proc. 93-50 authorizes the use of the per-diem method to substantiate the amount of lodging, meal, and incidental costs, this method of reporting is available only where employers pay a per-diem allowance in lieu of reimbursing the actual expenses an employee incurs while traveling away from home. Therefore, petitioner's [taxpayer’s] expenses for lodging are not included within this provision because he was self-employed. Although petitioner [taxpayer], as a self-employed individual, is entitled to use the per-diem method allowed under section 4.03 of Rev. Proc. 93-50, that provision is limited only to meals and incidental expenses.Duncan

Just one month after Duncan, the Tax Court released William K Starr v Commissioner, TC Memo 2000-305  (“Starr”) which mentions the then recently issued Duncan decision.  Starr was also a self employed over-the-road trucker who relied upon Rev Proc 94-77 which is also one of the Travel Revenue Procedures that we have discussed in more detail in another FAQ.  The Tax Court wrote in Starr:

“Under Rev. Proc. 94-77, 1994-2 C.B. 825, employees and self-employed individuals are allowed to use the Federal per diem rate to substantiate business meals and incidental expenses incurred when traveling away from home. However, the use of the Federal per diem rate to substantiate the amount of lodging expenses is available only to certain employer-employee reimbursement arrangements. The procedure excludes self-employed individuals from using the Federal per diem rate to substantiate the amount of their lodging expenses. Therefore, a self-employed individual must still prove the amount of lodging costs with documentary evidence.Starr


I've Been Notified I'm Being Audited for Claimed Travel Expenses - Can Dozing 4 Dollars Help Me? Top

I have been using a GPS Tracking Program and was just notified that I am now being audited by either the IRS or a state agency for claiming travel expenses – how can Dozing 4 Dollars™  help me now?

Dozing 4 Dollars™  is currently capable of computing your travel deductions for the years 2010, 2011, 2012, 2013 and 2014 for anywhere in Continental United States or Canada.  Additional locations can also be added if necessary.  Just because you did not originally claim and/or properly document your travel deductions on your original tax return, does not prevent you from now taking advantage of our Dozing 4 Dollars™  program.  Remember, your GPS Tracking Program already timely recorded your travel which is the primary requirement for properly claiming travel deductions.

If you have been preparing your own tax returns, we can also recommend an experienced tax professional to review your filed returns and discuss the various topics involved in your pending tax audit.  Two words of advice - “don’t procrastinate”.  The IRS will not wait around while you “drag your feet” deciding what to do now that you are being audited. 

Next call your GPS tracking company to verify they still have your complete prior year(s) pinged locations.  With your permission, your GPS tracking company can provide us with your entire prior year(s) pinged information for our processing.

After your prior year(s) data has been uploaded to our system, the only required input our program needs from you is to go back to the start of each affected year and tell us when and where the driver(s) incurred lodging expenses.  Our program will have already determined possible sleeping location(s) so an internet input screen will be provided to you to upload the lodging expense that was incurred on specific days for each and every driver.  To make your uploading easier, our program will assist you driver by driver.

Once loaded, our multi U.S Patented Program is typically ready to supply you, your tax preparer, and the IRS Auditor with between 4,000 pages and 6,000+ pages to legally establish the date, place, and business purpose of your travel.  If you and/or your tax preparer prefers, we can also be added to your IRS Power of Attorney to directly discuss your travel deductions with your IRS Auditor for an additional fee.

If you have multiple drivers affected by your pending IRS Audit, the 4,000 pages and 6,000+ pages mentioned above applies to each and every driver.  For example, if you have had 10 drivers, the total page count detailing your legally allowable travel should easily exceed 40,000 pages to 60,000+ pages.   Or putting it another way, the IRS Auditor could be potentially receiving 600 pounds of printed travel documentation that is 22 feet deep!

The IRS reminds everyone that to claim a lodging expense, a physical receipt must be issued by the hotel/motel and kept by the employer showing the hotel/motel name, lodging location, date, and person(s) who stayed at that facility.


IRS No Longer Using Pub 1542 Top

http://www.irs.gov/uac/Publication-1542,-Per-Diem-Rates  Per below, starting with 2013, Pub 1542 will no longer be published.

Publication 1542, Per Diem Rates

This publication is for employers who pay a daily allowance to employees for business travel away from home within the continental U.S. It gives the maximum daily rate they can use without treating part of the allowance as wages for tax purposes.


Current Products

Publication 1542 (HTML)


Recent Developments

Publication 1542 Will No Longer Be Updated -- 21-MAY-2012

Publication 1542 Will No Longer Be Updated -- 21-MAY-2012

 


Other Items You May Find Useful:

All Revisions for Publication 1542

Publication 463, Travel, Entertainment, Gift, and Car Expenses

Per Diem Rates on the U.S. General Services Administration (GSA) Website

The shortcut for this page is www.gsa.gov/perdiem


For Drivers



Just How Easy is Dozing 4 Dollars to Use? Top

To be updated...


Must You Be a Truck Driver to Claim These Travel Deductions? Top

To be updated...


Can Local Drivers Also Claim These Travel Deductions? Top

To be updated...


Why Shipping Companies Should Be Willing to Share Out-of-Date GPS Data with Their Drivers? Top

To be updated...


How is Travel Defined for Tax Purposes - I'm Confused? Top

To be updated...


Briefly Explain Why Self Employed Truckers Cannot Use Gov't Lodging Rates? Top

To be updated...


Can You Briefly List the Legal Authoities that Allows these Travel Deductions without Receipts? Top

To be updated...


Can I See the Math Computation if I am Both the Owner & Only Driver? Top

To be updated...


Can I See the Math Computation Savings for Both Employer vs Employee Used in Your Example? Top

To be updated...


Can I See the Math Computation if I am Both the Owner & Only Driver - Not Incorporated? Top

To be updated...