[Federal Register Volume 67, Number 218 (Tuesday, November 12, 2002)]
[Proposed Rules]
[Pages 68539-68540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28544]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-141832-02]
RIN 1545-BB20


Substantiation of Incidental Expenses

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of proposed rulemaking 
by cross-reference to temporary regulations.

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SUMMARY: This document contains proposed amendments to regulations 
relating to the requirement to substantiate business expenses for 
traveling expenses while away from home. In the Rules and Regulations 
section of this issue of the Federal Register, the IRS is issuing 
temporary regulations relating to the requirement to substantiate 
business expenses for traveling expenses while away from home under 
section 274 of the Internal Revenue Code. The text of those regulations 
also serves as text for these proposed regulations. This document also 
contains proposed regulations amending the regulations under section 62 
to conform the cross-reference to the regulations under section 274.

DATES: Written or electronic comments and requests for a public hearing 
must be received by February 10, 2003.

ADDRESSES: Send submissions to: CC:ITA:RU (REG-141832-02), Room 5226, 
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, 
DC 20044. Submissions may be hand delivered Monday through Friday 
between the hours of 8 a.m. and 5 p.m. to: CC:ITA:RU (REG-141832-02), 
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., 
Washington, DC. Alternatively, taxpayers may submit electronic comments 
directly to the IRS Internet site at www.irs.gov/regs.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
John Moriarty, (202) 622-4930; concerning submissions of comments and/
or requests for a public hearing, LaNita Van Dyke, (202) 622-7180 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    Final and temporary regulations in the Rules and Regulations 
section of this issue of the Federal Register amend the Income Tax 
Regulations (26 CFR part 1) relating to section 274. The temporary 
regulations authorize the Commissioner to establish a method under 
which a taxpayer may use a specified amount or amounts for incidental 
expenses paid or incurred while traveling away from home in lieu of 
substantiating the actual cost of incidental expenses. The text of the 
temporary regulations also serves, in part, as text for these proposed 
regulations. The preamble to the temporary regulations explains the 
amendment.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It is hereby 
certified that these regulations will not have a significant economic 
impact on a substantial number of small entities. This certification is 
based upon the fact that these regulations do not require a collection 
of information and do not impose any new or different requirements on 
small entities. Therefore, a Regulatory Flexibility Analysis under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. 
Pursuant to section 7805(f) of the Internal Revenue Code, this notice 
of proposed rulemaking will be submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on their 
impact.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
copies) or electronic comments that are submitted timely to the IRS. 
The IRS and Treasury Department request comments on the clarity of the 
proposed rules and how they can be made easier to understand. All 
comments will be available for public inspection and copying. A public 
hearing will be scheduled if requested in writing by any person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the public hearing will be 
published in the Federal Register.

Drafting Information

    The principal author of these regulations is John Moriarty, Office 
of Associate Chief Counsel (Income Tax & 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.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAXES

    1. The authority citation for part 1 continues to read in part as 
follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 1.274-5 also issued under 26 U.S.C. 274(d). * * *

    2. Section 1.62-2 is amended by removing the last three sentences 
of paragraph (e)(2) and adding two

[[Page 68540]]

sentences in their place to read as follows:


Sec.  1.62-2  Reimbursements and other expense allowance arrangements.

* * * * *
    (e) * * *
    (2) * * * See Sec.  1.274-5(g) and (j), which grant the 
Commissioner the authority to establish optional methods of 
substantiating certain expenses. Substantiation of the amount of a 
business expense in accordance with rules prescribed pursuant to the 
authority granted by Sec.  1.274-5(g) or (j) will be treated as 
substantiation of the amount of such expense for purposes of this 
section.
* * * * *
    3. Section 1.274-5 is amended by:
    1. Adding paragraph (j)(3).
    2. Adding a new sentence at the end of paragraph (m).
    The additions read as follows:


Sec.  1.274-5  Substantiation requirements.

    [The text of proposed Sec.  1.274-5(j)(3) and the proposed new 
sentence at the end of Sec.  1.274-5(m) are the same as the text of 
Sec.  1.274-5T(j)(3) and the last sentence of Sec.  1.274-5T(m) 
published elsewhere in this issue of the Federal Register].

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 02-28544 Filed 11-8-02; 8:45 am]
BILLING CODE 4830-01-P