[Federal Register Volume 63, Number 190 (Thursday, October 1, 1998)]
[Rules and Regulations]
[Pages 52600-52601]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26226]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 8784]
RIN 1545-AV89
Substantiation of Business Expenses--Use of Mileage Allowances To
Substantiate Automobile Expenses
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Temporary and final regulations.
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SUMMARY: This document contains temporary and final regulations
relating to the use of mileage allowances to substantiate automobile
business expenses. The regulations affect payors who make payments and
employees who receive payments under reimbursement or other expense
allowance arrangements for the business use of an automobile.
DATES: Effective date: These regulations are effective October 1, 1998.
Applicability date: These regulations apply to transportation
expenses paid or incurred after December 31, 1997.
FOR FURTHER INFORMATION CONTACT: Donna M. Crisalli, (202) 622-4920 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background and Explanation of Provisions
Section 274(d) provides that a taxpayer is not allowed a deduction
or credit for certain expenses unless the expense is substantiated.
These substantiation requirements apply to the expenses of use of any
listed property (defined in section 280F(d)(4)), which includes any
passenger automobile and any other property used as a means of
transportation. The Secretary may issue regulations that provide that
some or all of the substantiation requirements will not apply to
expenses that do not exceed a prescribed amount.
Section 1.274(d)-1 provides, in part, that the Commissioner may
prescribe rules under which mileage allowances reimbursing ordinary and
necessary expenses of local travel and transportation while traveling
away from home will satisfy the substantiation requirements of
Sec. 1.274-5T(c), and the requirements of an adequate accounting to the
employer for purposes of Sec. 1.274-5T(f)(4). However, Sec. 1.274(d)-
1(a)(3) provides that such mileage allowances are available only to the
owner of a vehicle.
New Sec. 1.274(d)-1T applies these substantiation rules to mileage
allowances for business use of an automobile after December 31, 1997,
without the limitation in Sec. 1.274(d)-1(a)(3) that a mileage
allowance is available only to the owner of a vehicle. See Rev. Proc.
97-59 (1997-52 I.R.B. 24), for rules that implement these regulations.
The regulations also adopt new Sec. 1.62-2T(e)(2) to incorporate this
new rule.
Special Analyses
It has been determined that these temporary and final regulations
are not a significant regulatory action as defined in EO 12866.
Therefore, a regulatory assessment is not required. It also has been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations, and, because the
regulations do not impose a collection of information on small
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f) of the Internal Revenue Code, these
temporary and final regulations will be submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on their
impact on small business.
Drafting Information
The principal authors of these regulations are Edwin B. Cleverdon
and Donna M. Crisalli of the Office of the Assistant Chief Counsel
(Income Tax and Accounting). However, other personnel from the IRS and
Treasury Department participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by adding
entries in numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.274(d)-1 also issued under 26 U.S.C. 274(d).
Section 1.274(d)-1T also issued under 26 U.S.C. 274(d). * * *
Par. 2. In Sec. 1.62-2, paragraph (m) is amended by adding a
sentence at the end of the paragraph to read as follows:
Sec. 1.62-2 Reimbursement and other expense allowance arrangements.
* * * * *
(m) * * * Paragraph (e)(2) of this section applies to payments made
under reimbursement or other expense allowance arrangements received by
an employee with respect to expenses paid or incurred on or before
December 31, 1997. For payments with respect to expenses paid or
incurred after December 31, 1997, see Sec. 1.62-2T(e)(2).
Par. 3. Section 1.62-2T is added to read as follows:
Sec. 1.62-2T Reimbursement and other expense allowance arrangements
(temporary).
(a) through (e)(1) [Reserved]. For further guidance, see Sec. 1.62-
2(a) through (e)(1).
(e)(2) Expenses governed by section 274(d). For further guidance,
see Sec. 1.62-2(e)(2) except that each reference to Sec. 1.274(d)-1 is
deemed to be a reference to Sec. 1.274(d)-1T.
(e)(3) through (l) [Reserved]. For further guidance, see Sec. 1.62-
2(e)(3) through (l).
(m) Effective dates. Paragraph (e)(2) of this section applies to
payments made under reimbursement or other expense
[[Page 52601]]
allowance arrangements received by an employee with respect to expenses
paid or incurred after December 31, 1997. For payments with respect to
expenses paid or incurred on or before December 31, 1997, see
Sec. 1.62-2(e)(2).
Par. 4. Section 1.274(d)-2 is amended by adding paragraph (b) to
read as follows:
Sec. 1.274(d)-1 Substantiation requirements.
* * * * *
(b) Effective date. This section applies to allowances described in
paragraph (a)(2) of this section for expenses paid or incurred on or
before December 31, 1997. For allowances for expenses paid or incurred
after December 31, 1997, see Sec. 1.274(d)-1T.
Par. 5. Section 1.274(d)-1T is added to read as follows:
Sec. 1.274(d)-1T Substantiation requirements (temporary).
(a) (1) and (2) [Reserved]. For further guidance, see
Sec. 1.274(d)-1(a)(1).
(a)(3) [Reserved].
(b) Effective date. This section applies to allowances described in
Sec. 1.274(d)-1(a)(2) for expenses paid or incurred after December 31,
1997. For allowances for expenses paid or incurred on or before
December 31, 1997, see Sec. 1.274(d)-1(a).
Approved: September 14, 1998.
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
Donald C. Lubick,
Assistant Secretary of the Treasury.
[FR Doc. 98-26226 Filed 9-30-98; 8:45 am]
BILLING CODE 4830-01-P