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Can Anything be Done for to Extend CA Per Diem Beyond One Year? California

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  • Can Anything be Done for to Extend CA Per Diem Beyond One Year? California

    I have recently been told by my employer that the per diem that I have been getting since I was hired a year ago is ending and will be rolled over as regular pay. I am told that 'it's the law'. The per diem is due to my having to maintain two households. My primary residence is Oceanside, California and I work for a 'government research facility' in Pasadena, CA, a distance of 110 miles. My 'employer' is a job shop'. On weekdays, I live in the Los Angeles area. Today I got my first weekly paycheck with the change, and the 'cut' was substantia. Do I have a recourse? Can it be extended beyond one year? Is there anything I can do to restore the per diem, which is what I am counting on to pay for my temporary domicile in the LA area? Thanks. I would appreciate a response.

  • #2
    The one year rule is part of the Internal Revenue Code. It is a function of "tax home", something very near and dear to IRS.
    - First of all, the government in its' entirety could not care less if you every get paid Per Diem, or wages or anything else.
    - All the "tax home" rule does is say that under certain circumstances certain payments the employer chooses to may might be paid non-taxable. Let's say that Bob normally works in New York. Bob's boss hates him and he gets sent to Fargo, North Dakota for 6 months. At this point the legal intention is that Bob returns to NY after 6 months. If all rules are followed, there is a very good chance that all living expenses for Bob while in Fargo for those 6 months is tax free. There is no governmentally imposed requirement that Bob be reimbursed those expenses, but should the reimbursement occur and the "accountable plan" rules are followed, if is likely non-taxable. However, at month 3, Bob's boss (who still hates him) extends Bob stay in Fargo for a total of 18 months. As far as IRS is concerned, Bob just moved to Fargo and Bob's tax home just moved with him in very instant the decision to extend Bob past the 12 month mark occurred. All expenses paid by Bob's employer once the "more then 12 months" decision gets made just became taxable. Please note that I am not saying that the first 12 months are non-taxable. I am saying that the instant the decision to extend past 12 months occurs, all future expenses incurred just became taxable. This stuff is all spelled out in IRS Publication 463 Travel, Entertainment, Gift, and Car Expenses.
    - Which brings us to Per Diem. This is a phrase that different people use for different purposes. If we are talking about the government, IRS has an accrual publication with their rules (Per Diem publication 1542). IRS considers Per Diem to be a safe harbor method to reimburse expenses. Assuming all other accountable plan rules are followed (see pub 463), then the employer has the legal option of reimbursing exact expenses (receipts needed), or instead following the Per Diem method. In either way, we are talking expense reimbursements of accountable plan expenses. IRS like the rest of the federal government could not care less is the expense reimbursement (or wage payment) ever occurs. IRS just wants taxes on any taxable transactions that do occur.

    There is nothing your employer can do to alter the IRC tax home rules.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

    Comment


    • #3
      OP, what is this "per diem" for? Is it for expenses to maintain a secondary residence? If so, the employer is not required to do that at all. Business-related expenses must be reimbursed under the California Labor Code. However, this is a personal expense and the employer can eliminate it at any time unless there is an enforceable contract that prohibits them from doing so.
      I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

      Comment

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