Reimbursement for travel expenses are common in the world of business and government but often have the rules misapplied about when the reimbursements are taxable. It turns out that the IRS is not immune to this misapplication after a study of the taxes of several dozen of it’s top executives were found to be incorrect in that regard. The problematic issue arose on the difference between temporary and long term travel. Simply put, travel that last or is expected to last longer than a year is not a tax free reimbursement and must be claimed. This is laid out in Revenue Ruling 93-86, issued in 1992, which contains a fairly comprehensive set of questions and answers that explain the difference. But, as with all things tax related, the devil is in the details so circumstances will always dictate the categorization of the travel expense so make sure to double check the regulations on any reimbursement in the gray area for protection from future IRS hassles.
See Kevin E. Packman, Even Though IRS Executives Do Not Know It, Employee Travel Reimbursements Can be Taxable, Wealth Strategies Journal, January 18, 2016.
