Evening star., 1935-03-05
TRAVELLING COSTS
INCOME TAX RULE
ST|RS DISCUSSION
Allowances Must Be Put
in Gross Pay, Revenue
Bureau Declares.
DEDUCTION CLAIMS
CAN BE CHECKED UP
Government Seen Able to Use
Figures in Rating Expenses
on Trirs.

A ruling by the I, ternal Revenue
Bureau that per diem travel allow
ances to all Federal employees will be
considered as a partsof gross income
and must be included in income tax
returns has created Considerable con-
fusion in the Government depart
ments and many inquiries and pro-
tests are being received from virtually
all executive branches of the service.
The bureau has rSled that neces-
sary travel expenses uay be deducted
for tax purposes and that in the
future an itemized list Of such ex-
penses must be made If tax deduc-
tions are to be allowed.
The ruling, applied to the Govern
ment service for the first time this
year, is too new for a test case to
have arisen. The Internal Revenue
Bureau, however does not anticipate
any great difficulty N enforcing the
regulation. it was said.
The ruling will affect all Govern
ment employees who travel on the per
diem allowance basis. In every Fed
eral agency disbursing clerks, required
to report this year for the first time
on disbursements to individual en-
ployes, are required to include per
diem travel allowances as a part of
the gross income reported for each
employe.
Detail Not Required.
In view of the fact that the ruling
frl -
Of Federal workers, detailed travel ex-
penoltures Will not be required to be
shown unless the employe has kept a
detailed account Of such expenses, 1t
was said
In case of question arising in in
dlvldual cases, however, the employe
probably will be called upon to sub
stantiate as far as possible his estt-
mated travel expenses. This will mean
that he must supply information as to
the type OF hotels at which he stopped
and other similar information to ex-
plain the estimates which he makes. it
was explained.
In passing upon such disputed
cases. 1t was explained by L. K
Sunderlin, chief of the rules and reeu-
latlons section Of the Internal Rev
enue Bureau, the bureau will be
guided by general governmental ex-
perlence and judgment as to what it
costs man to live on the road.
The new ruling stipulates that trave,
expenses, as ordinarily understood.
INCLUDE railroad fares and meals ano
lodging. In the governmental service
however, the problem for the individ-
ual is slmplified by the fact that rail.
road fares are handled separately alc
need not enter into the tax return.
Some Expenses Personal.
II a trip is undertaken for other
than business purposes, the railroad
fares are personal expenses and the
meals and lodgings are living ex-
penses 1or tax return purposes, it
was explained. If the trip is solely
for business, the reasonable and
necessary travel expenses" are busi-
ness expenses and are deductible.
II an individual receives q salary
and also an allowance for meals and
lodging, as. for example, a per diem
allowance in lieu of subsistence" the
bureau ruled. ''the amount of the al
ioWance should be included in gross
income and the cost of such meas
and lodging may be deducted there
from"
1t is ruled that claim for the de-
ductions must be substantiated
when required by the commissioner,
by evidence showing in detail the
amount and nature of the expenses
incurred"
This will require the keeping of de-
tailed travel expense accounts by Fed
eral employees who travel on a per
diem allowance in the future, it is
understood.
Although the per diem travel rule
Is new for governmental employees, it
has been applied in the past to
travelling statesmen and othed en-
ployes of private business concerns
who travel regularly. If they receive
a fiat travel allowance it must be ac-
counted for as part of gross income.
Expense accounts. which are paid to
cover a detailed showing of expenses,
however, do not figure in income tax
rnft lo.s