News

IRS Reminders for Transportation Industry
Monday, 01 February 2010

Revenue Procedure 2009-47 and 2009-42 Internal Revenue Bulletin 524 (and its predecessors) provide rules under which the amount of ordinary and necessary business expenses for meals and incidental expenses incurred while traveling away from home may be deemed substantiated.

In general, under Rev. Proc. 2009-47, if certain requirements are satisfied, an individual’s M&IE may be deemed substantiated in an amount equal to or less than the applicable federal M&IE rate for the individual’s locality of travel for each calendar day, or partial day, of travel.

Section 4.04 of Rev. Proc. 2009-47 provides special flat rates to compute the amount of M&IE deemed substantiated for individuals in the transportation industry for each calendar day, or partial day, of travel. An individual must satisfy two requirements to be considered in the transportation industry and eligible to use the special transportation industry rates in section 4.04.

These requirements are:

1. The individual’s work is of the type that directly involves moving people or goods by airplane, barge, bus, ship, train or truck, and
2. The individual’s work regularly requires travel away from home that, during any single trip away from home, usually involves travel to localities with differing federal M&IE rates.

An individual that satisfies only one of the two requirements is not in the transportation industry and may not compute the amount of M&IE deemed substantiated using the special transportation industry rates provided in section 4.04.

For example:

Individual A is an employee of a railroad company and travels away from home for the employer on a route that includes only localities with a federal M&IE rate of $46. Individual A does not work any other routes. Because Individual A does not travel between locations with different federal M&IE rates, Individual A does not qualify as an individual in the transportation industry and cannot use the special rates provided in section 4.04. However, Individual A may use the applicable federal M&IE rate ($46) for the localities included in the route.

References/Related Topics

• Revenue Procedure 2009-47