Per Diem Ruling - Additional Information

Last post we posted the latest IRS REV Ruling on using cents per mile to determine per diem. The new guidelines would have you test the monthly payroll calculations, to see if per diem paid exceeded the daily $52 allowance. It is not clear if the testing should be random or 100% testing, and if required weekly, bi-weekly or monthly. The gist of the ruling is to curb abuse where more than the $52 limit is being paid out, thus payroll taxes are not collected on the overage. The penalty for being out of compliance is loss of the entire per diem amount, thus subjecting the whole per diem payment to payroll tax liability, plus penalty and interest.

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In a recent state audit of a truck company, the state position was to require our firm to pro-rate the federal income to the domicile state based on mileage run thru the state to total miles driven, and did not allow the company to report all income to its state of domicile.