Transportation Brief: The Tax Law and Motor-Carrier-Sponsored Per Diem Plans
March 5, 2018
The Act suspended the ability of employee truck drivers from itemizing deductions related to meal and incidental expenses they incur while on the road. But the Act did not affect a motor carrier’s ability to treat the amount of an over-the-road driver’s compensation that accounts for those expenses as nontaxable under a properly structured per diem plan. As a result, some pundits are encouraging motor carriers to make more aggressive use of per diem programs to increase interest among potential new hires.
While the Act’s suspension of itemized deductions renders sponsorship of a per diem program more attractive on some levels, caution is warranted! The IRS has traditionally taken a dim view of these plans and may perceive the change in the deductibility of per diem expenses by individual employee drivers as a means to undercut the ongoing viability of such plans.
Caution is also warranted on the wage and hour front. A driver’s participation in a properly structured per diem program does not impact the motor carrier’s obligation to comply with federal minimum wage laws and pay the driver a proper rate. The plaintiffs’ bar has doggedly pursued motor carriers in an effort to prove otherwise. The Firm anticipates that some will view the Act’s changes as an opportunity to revisit the impact of per diem plan participation on minimum wage law compliance.
While the Act did not change the motor carrier’s side of the balance sheet when it comes to properly structured per diem plans, motor carriers must ensure their per diem plans are carefully structured to withstand increased scrutiny by adversaries.
Scopelitis’ Transportation Brief® is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.
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