Why can't a trucking company simply use the popular "Cents Per Miles driven" to calculate allowable per diem? - More Details

We have listed in another FAQ the 25 IRS Travel Revenue Procedures.  Another set of published Revenue Procedures most readers are generally aware of is the "deemed substantiated" auto business mileage rates that are published annually and can be claimed on tax returns each year without having to prove your actual mileage costs to anyone. 

 

The origin of the “cents per miles driven” methodology can be directly traced to Section 3.03 "Flat rate or stated schedule" located in these 25 IRS Travel Revenue Procedures:

"3.03. Flat rate or stated schedule.

"(1) . . . 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."

 

So if this methodology has its roots in these IRS Travel Revenue Procedures, why shouldn’t truckers keep using it?

 

Many trucking companies and independent truckers have and unfortunately continue to receive IRS audit notices asking these companies and independent truckers to provide “proof” for their claimed travel per diem.  Many of those who receive these IRS audit notices are shocked to later learn that simply multiplying daily recorded mileage times a daily meal rate is not enough “proof” for an IRS Auditor to permit these claimed travel deductions.  Why?

 

These same IRS Travel Revenue Procedures Section 4.03 first insist that anyone wishing to claim any travel deductions must be able to unequivocally provide independent “proof” of (1) date; (2) place; and (3) business purpose for the claimed travel.

 

Quoting from the 2012 IRS Publication 463 “Travel, Entertainment, Gift, & Car Expenses”:

 

“If the IRS finds that an employer’s travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer.  In this case, you must be able to prove your expenses to the IRS.” 2012 Pub 463 Pg 31

 

Simply relying upon the “cents per miles driven” does not meet this absolute substantiation requirement.   Other reasons for not using the “cents per miles driven” methodology include:

 

  1. With the DOT (Department of Transportation) imposing more restrictive rules on truckers regarding the number of daily driving hours, the corresponding number of daily driving miles has been trending downwards.
  2. With the DOT imposing more substantiation requirements on truckers regarding the number of daily driving hours, the corresponding number of daily driving miles has been trending downwards. 
  3. Since this methodology does not take into consideration the higher costing geographic locations for the travel locations, users tend to be much too conservative as to the maximum daily rate available.

 

But this is where you’re GPS independently derived travel information comes in.  Your GPS already provides the objective third party proof necessary for reliance upon these Travel Revenue Procedures’ Section 4.03  by providing both the (1) exact time the GPS was pinged; and (2) the exact latitude and longitude (“lat-long”) anywhere on the Earth.

 

Dozing 4 Dollars™  takes your GPS pinged lat-long locations and then calculates the correct IRS pre-approved per diem rates for each specific location as required by the IRS.