IRS Revamps Incidental Expense Definition

December 30, 2004 ( - The Internal Revenue Service (IRS) has conformed its definition of incidental expense to federal travel regulations for 2005.

According to a report, the definitions were not the same until this year, making reimbursement of such expenses more complicated for employers. In IRS Revenue Procedure 2005-10, an incidentalexpense is defined as:

  • fees and tips given to porters, baggage carriers, bellhops, hotel maids,stewards or stewardesses and others on ships, and hotel servants in foreigncountries
  • transportation between places of lodging or business and places wheremeals are taken, if suitable meals can be obtained at the temporary dutysite
  • the mailing cost associated with filing travel vouchers and payment ofemployer-sponsored charge card billings.

Revenue Procedure 2005-10 supersedes the guidance the IRS issued last year on perdiems, Rev. Proc. 2004-60.

However, the IRS has given employers and planadministrators a grace period. Employers and planadministrators may continue to apply Revenue Procedure. 2004-60for per diem allowances paid to an employee, as well as per diems coveringlodging and M&IE paid or incurred for travel away from home, on or afterJanuary 1 and before March 1.

Thompson said Revenue Procedure. 2004-60also may be applied incomputing deductions for of M&IE or incidental expenses paid or incurred byan employee for travel away from home on or on or afterJanuary 1 and before March 1.