In a letter addressing the deductibility of travel expenditures by employees based on whether they are physically present in an employer-provided work area, the leading body for U.S. accountants said that IRS and Treasury officials need to update their guidelines on remote working arrangements.
In a letter dated August 25, the American Institute of Certified Public Accountants requested clarification from the Treasury Department and the IRS on a number of issues. One was, according to the AICPA, “determining how an employee should be reimbursed for expenses incurred in commuting to an employer-provided work location when travel days are limited and the distance has increased.”
The group stated that it had come to the following conclusion:
“current revenue rulings and interpretations of case law are outdated, do not reflect the current work environment, and are unclear in many instances”after studying new scenarios involving various work arrangements, including employer location-based, remote, and hybrid arrangements.
The statement further added: “The lack of updated guidance has left employers and employees in the untenable position of making decisions regarding employer workplace policies while the rules regarding amounts reported as payments, to or for the benefit of employees, remain uncertain.”
The letter stated that in many contemporary work arrangements, both the employer and the employee see the latter’s home as the primary location of work.
A part of the letter says:
“In many instances, existing tax guidance does not apply to today’s work arrangements to determine when expenses are deductible travel expenses and when such amounts are non-deductible commuting expenses.”
The AICPA specifically suggested that Rev Rul 99-7 be changed by Treasury and the IRS so that it no longer refers to the “exclusive use” criterion under Code Sec. 280A(c) and takes into account contemporary work arrangements. The accounting group also suggested that the definition of “for the convenience of employer” be modified.
Alternatively, the AICPA suggested new guidelines establishing a safe harbor to be applied in figuring out a “principal place of business” with certain criteria that would no longer make reference to the “exclusive use” requirement of Code Sec. 280A. (c).
In response to inquiries from workers concerning remote work options, the letter claims that businesses are reevaluating their fringe benefit programs. These concerns include whether or whether days spent in an employer-provided office count as travel days for which remote workers may be eligible for reimbursement of their costs.
The AICPA also suggested that Treasury and the IRS improve the definition of “pursuit of a trade or business,” give advice on how contemporary work location arrangements are distinguished, and explain the tax treatment of non-travel expenditures paid when workers work remotely.
The AICPA advised Treasury and the IRS that new guidance should be released that takes into consideration any transition assistance companies might require to facilitate compliance because many organizations have established policies and practises “based on reasonable interpretations of existing guidance.”
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