Hypothetical - county employee goes to neighboring town for training. Does not stay overnight, but spends longer than a "normal" work day and eats a meal while there. Since the individual is not gone long enough to require "substantial food or rest" (IRS words, not mine..) may the county reimburse for lunch or does that become taxable income creating additional paperwork at the end of the year?

My Sheriff & auditor are about to duel over this...

Lisa L. Peterson
Nolan County Attorney

The IRS has an explanation of traveling away from home which would determine, under a particular set of facts, if the meal was taxable. See: http://www.irs.gov/publications/p463/ch01.html.

Hope this helps.

That reg refers to being away from home for a period "substanially longer than a days' work" and requiring sleep or rest.

The problem facing me is the person who goes to a seminar from 8 to 5 on a work day; can't get "home" for a meal and eats out. APparently DPS allows for a meal per diem in that case, and it isn't showing on the taxes at the end of the year.

What are others doing?

Lisa L. Peterson
Nolan County Attorney

We have a separate per diem for non-overnight and overnight trips. The non-overnight is, of course, less per diem. The travel policy also states that the event must be outside of Hale County.

I never claim to be a tax attorney, but does it make any different that regulation that is being discussed has to do with taking a deduction versus whether the payment is taxable income?

[This message was edited by Jim Tirey on 05-20-09 at .]

Here is the Travis County budget rule: "Consistent with IRC, meal expenses will be reimbursed only when the employee is required to be out of the county overnight, except in the case of Jury Sequestration." It is a conservative position based on the rest/sleep requirement. According to the IRS examples, an hour off to eat is not sufficient for rest, nor is a nap in the car.

The DPS might be working under a different exclusion. There are other ways an employer provides a non-taxable meal (typically for the convenience of the employer and on premises) An exception you might explore is IRS Regulation 1.132-6. "Regular meal money does not qualify for the exclusion. The exclusion for meal money must meet three criteria: it is provided (1) on an occasional basis, (2) because overtime work necessitates the extension of the employee's normal work schedule, and (3) to enable the employee to work overtime." I don't know if this is the DPS premise or not.

Another way to approach the discussion might be to decide whose budget will pay the penalties and interest if non-taxed meals are determined to be taxable during an IRS audit. It is an assumption of the risk that may make commissioners court the tie breaker, or the policy-maker if it is adopted as a benefit for deputies under some other reg.

In reading the IRS regs (NOT my favorite...give me an abatement problem any day!) it seems that perhaps the meal reimbursement would qualify as a "de minimis fringe benefit"...it is not routine, allows for overtime...and we are not talking large sums, either from the budget or per individual.

The box that I'm in is that if we don't payfor these meals, the deputies will start going far enough away for the same training that they can stay overnight...all for the price of a lunch.

Makes no sense to me!

Lisa L. Peterson
Nolan County Attorney

The devil's always in the details. We provide an "on duty" meal to L/E or Corrections as a de minimus fringe when they are watching prisoners. It is an adopted court policy with specific triggers. As long as you have clear rules for your benefit that meet the IRS guidelines (and reduce the risk of misuse), you have probably resolved your conflict.