[Federal Register: April 8, 2010 (Volume 75, Number 67)]
[Rules and Regulations]
[Page 17854-17857]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ap10-5]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 301, and 602
[TD 9481]
RIN 1545-BG92
Travel Expenses of State Legislators
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations relating to travel
expenses of state legislators while away from home. The regulations
affect eligible state legislators who make the election under section
162(h) of the Internal Revenue Code (Code). The regulations clarify the
amount of travel expenses that a state legislator may deduct under
section 162(h).
DATES: Effective Date: These regulations are effective April 8, 2010.
Applicability Date: For date of applicability, see Sec. 1.162-
24(h).
FOR FURTHER INFORMATION CONTACT: R. Matthew Kelley, (202) 622-7900 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in these final regulations
has been reviewed and approved by the Office of Management and Budget
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)) under OMB Control Number 1545-2115.
The collection of information in these final regulations is in
Sec. 1.162-24(e). The information will help the IRS determine if a
taxpayer may make or revoke an election under section 162(h). The
collection of information is required to obtain a benefit. An agency
may not conduct or sponsor, and a person is not required to respond to,
a collection of information unless the collection of information
displays a valid control number assigned by the Office of Management
and Budget.
The information will be reported on a statement attached to
individual tax returns. The time needed to complete and file this
statement will vary
[[Page 17855]]
depending on individual circumstances. The estimated burden for
individual taxpayers filing this statement is 30 minutes.
Comments concerning the accuracy of this burden estimate and
suggestions for reducing this burden should be sent to the Internal
Revenue Service, Attn: IRS Reports Clearance Officer,
SE:W:CAR:MP:T:T:SP, Washington, DC 20224, and to the Office of
Management and Budget, Attn: Desk Officer for the Department of the
Treasury, Office of Information and Regulatory Affairs, Washington, DC
20503.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax returns and
return information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains final amendments to the Income Tax
Regulations, 26 CFR part 1, 26 CFR part 301, and 26 CFR part 602,
relating to travel expenses of state legislators while away from home.
On March 31, 2008, a notice of proposed rulemaking (REG-119518-07)
was published in the Federal Register (73 FR 16797). Written comments
responding to the notice of proposed rulemaking were received. No
public hearing was requested or held. After consideration of all the
comments, the proposed regulations are adopted as amended by this
Treasury decision. The comments and revisions are discussed in the
preamble.
Explanation of Provisions and Summary of Comments
Under section 162(a), a state legislator may be entitled to deduct
expenses paid or incurred in conducting legislative business (for
example, living, transportation, and miscellaneous expenses) while
traveling away from home. In addition, section 162(h) allows a state
legislator to deduct deemed living expenses, but not other deemed
business travel expenses, on specified legislative days. These
regulations provide guidance on the special rules for deducting a state
legislator's deemed living expenses.
Section 162(h) and the proposed regulations provide that a taxpayer
who is a state legislator at any time during the taxable year may make
an election under section 162(h) to treat the taxpayer's place of
residence within the taxpayer's legislative district as the taxpayer's
tax home. In addition, as a result of the election the taxpayer is
deemed to be away from home in the pursuit of a trade or business on
each legislative day and is deemed to have expended an amount for
living expenses on that day. Under the proposed regulations, a
legislative day for a taxpayer includes each day (1) The legislature is
actually in session, (2) the legislature is not in session for a period
not longer than 4 consecutive days, (3) the taxpayer's attendance is
formally recorded at a meeting of a committee of the legislature, or
(4) the taxpayer's attendance is formally recorded at a session of the
legislature that only a limited number of members are expected to
attend, such as a pro forma session.
1. Limitation on Availability of Deduction for Travel Expenses
Some commentators expressed concerns that the proposed regulations
might impose new limits on state legislators' deductions for business
travel expenses and suggested that the proposed regulations should not
be finalized.
The final regulations do not adopt this comment because the
regulations do not impose new limits. The regulations merely clarify
the existing section 162(h) special rules for deducting state
legislators' deemed living expenses for each legislative day. The
regulations do not affect or limit the deduction for actual travel
expenses under section 162(a). A taxpayer may continue to deduct actual
substantiated travel expenses, whether or not the taxpayer qualifies
under the special rule for deducting deemed expenses under section
162(h).
2. Definitions of In Session and Legislative Day
Some commentators objected to Federal regulations defining when a
legislature is in session and what constitutes a legislative day for
purposes of section 162(h). The commentators expressed concern that the
proposed regulations would preempt state law governing the conduct of
legislative affairs. The commentators recommended that the regulations
not be issued.
The final regulations do not adopt this recommendation. These
regulations define in session and legislative day solely for the
purpose of interpreting the special rules of section 162(h), a matter
of Federal law. See Morgan v. Commissioner, 309 U.S. 78, 81 (1940)
(``If it is found in a given case that an interest or right created by
local law was the object intended to be taxed, the federal law must
prevail no matter what name is given to the interest or right by state
law.''). These regulations do not preempt or supersede state laws
governing the conduct or operation of state legislatures. The
regulations merely address what amounts (deemed living expenses) state
legislators may deduct under section 162(h).
3. Definition of a State Legislator
The proposed regulations provide that a taxpayer is a state
legislator for purposes of the regulations beginning on the day the
taxpayer is sworn into office and ending on the day following the day
on which the taxpayer's term in office ends.
Commentators noted that some state laws treat a legislator-elect as
a legislator before the legislator-elect is sworn into office, for
example, on the date elected, the date the election results are
certified, or on January 1 following the election. A commentator stated
that legislators-elect often move to the state capital immediately upon
election to conduct legislative business, for example, to participate
in the formation of committees and assignments. Commentators suggested
that the definition of a state legislator in the final regulations be
modified to permit legislators-elect to deduct legislative business
expenses under these circumstances.
The final regulations do not adopt this suggestion. Although a
legislator-elect who is present in the state capital on business prior
to being sworn into office is not eligible to deduct deemed living
expenses under section 162(h), the legislator-elect may be traveling
away from home and may be entitled to deduct actual business travel
expenses under the general rules of section 162(a).
4. Definition of a Committee of the Legislature
The proposed regulations provide that a committee of the
legislature is a group consisting solely of legislators charged with
conducting business of the legislature.
Commentators noted that it is common practice in a number of states
for legislative committees to have non-legislative members.
Commentators suggested that the final regulations modify the definition
of a committee of the legislature to include groups tasked with
conducting public policy or other legislative business that have
legislator and non-legislator members.
In response to these comments, the final regulations define a
committee of the legislature as a group that includes one or more
legislators and is charged with conducting business of the legislature.
[[Page 17856]]
5. Effective/Applicability Date
A commentator expressed concern that an effective date for the
final regulations that falls in the middle of a taxable year would
create confusion about expenses paid or incurred in the part of the
year before the effective date. To eliminate confusion, the final
regulations apply to expenses paid or incurred, or deemed expended
under section 162(h), in taxable years beginning after April 8, 2010,
the date of publication of this regulation.
Effect on Other Documents
Rev. Rul. 82-33 (1982-1 CB 28) is obsolete as of April 8, 2010.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 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 Code, the notice of proposed
rulemaking that preceded these final regulations was submitted to the
Chief Counsel for Advocacy of the Small Business Administration for
comment on its impact on small business.
Drafting Information
The principal author of these regulations is R. Matthew Kelley of
the Office of Associate Chief Counsel (Income Tax and Accounting).
However, other personnel from the IRS and Treasury Department
participated in their development.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR parts 1, 301, and 602 are amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 is amended by adding an
entry to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.162-24 also issued under 26 U.S.C. 162(h). * * *
0
Par. 2. Section 1.162-24 is added to read as follows:
Sec. 1.162-24 Travel expenses of state legislators.
(a) In general. For purposes of section 162(a), in the case of any
taxpayer who is a state legislator at any time during the taxable year
and who makes an election under section 162(h) for the taxable year--
(1) The taxpayer's place of residence within the legislative
district represented by the taxpayer is the taxpayer's home for that
taxable year;
(2) The taxpayer is deemed to have expended for living expenses (in
connection with the taxpayer's trade or business as a legislator) an
amount determined by multiplying the number of legislative days of the
taxpayer during the taxable year by the greater of--
(i) The amount generally allowable with respect to those days to
employees of the state of which the taxpayer is a legislator for per
diem while away from home, to the extent the amount does not exceed 110
percent of the amount described in paragraph (a)(2)(ii) of this
section; or
(ii) The Federal per diem with respect to those days for the
taxpayer's state capital; and
(3) The taxpayer is deemed to be away from home in the pursuit of a
trade or business on each legislative day.
(b) Legislative day. For purposes of section 162(h)(1) and this
section, for any taxpayer who makes an election under section 162(h), a
legislative day is any day on which the taxpayer is a state legislator
and--
(1) The legislature is in session;
(2) The legislature is not in session for a period that is not
longer than 4 consecutive days, without extension for Saturdays,
Sundays, or holidays;
(3) The taxpayer's attendance at a meeting of a committee of the
legislature is formally recorded; or
(4) The taxpayer's attendance at any session of the legislature
that only a limited number of members are expected to attend (such as a
pro forma session), on any day not described in paragraph (b)(1) or
(b)(2) of this section, is formally recorded.
(c) Fifty mile rule. Section 162(h) and this section do not apply
to any taxpayer who is a state legislator and whose place of residence
within the legislative district represented by the taxpayer is 50 or
fewer miles from the capitol building of the state. For purposes of
this paragraph (c), the distance between the taxpayer's place of
residence within the legislative district represented by the taxpayer
and the capitol building of the state is the shortest of the more
commonly traveled routes between the two points.
(d) Definitions and special rules. The following definitions apply
for purposes of section 162(h) and this section.
(1) State legislator. A taxpayer becomes a state legislator on the
day the taxpayer is sworn into office and ceases to be a state
legislator on the day following the day on which the taxpayer's term in
office ends.
(2) Living expenses. Living expenses include lodging, meals, and
incidental expenses. Incidental expenses has the same meaning as in 41
CFR 300-3.1.
(3) In session--(i) In general. For purposes of this section, the
legislature of which a taxpayer is a member is in session on any day
if, at any time during that day, the members of the legislature are
expected to attend and participate as an assembled body of the
legislature.
(ii) Examples. The following examples illustrate the rules of this
paragraph (d)(3):
Example 1. B is a member of the legislature of State X. On Day
1, the State X legislature is convened and the members of the
legislature are expected to attend and participate. On Day 1, the
State X legislature is in session within the meaning of paragraph
(d)(3)(i) of this section. B does not attend the session of the
State X legislature on Day 1. However, Day 1 is a legislative day
for B for purposes of section 162(h)(2)(A) and paragraph (b)(1) of
this section.
Example 2. C, D, and E are members of the legislature of State
X. On Day 2, the State X legislature is convened for a limited
session in which not all members of the legislature are expected to
attend and participate. Thus, on Day 2 the legislature is not in
session within the meaning of paragraph (d)(3)(i) of this section,
and Day 2 is not a legislative day under paragraph (b)(1) of this
section. In addition, Day 2 is not a day described in paragraph
(b)(2) of this section. C and D are the only members who are called
to, and do, attend the limited session on Day 2, and their
attendance at the session is formally recorded. E is not called and
does not attend. Therefore, Day 2 is a legislative day as to C and D
under section 162(h)(2)(B) and paragraph (b)(4) of this section. Day
2 is not a legislative day as to E.
(4) Committee of the legislature. A committee of the legislature is
any group that includes one or more legislators and that is charged
with conducting business of the legislature. Committees of the
legislature include, but are not limited to, committees to which the
legislature refers bills for
[[Page 17857]]
consideration, committees that the legislature has authorized to
conduct inquiries into matters of public concern, and committees
charged with the internal administration of the legislature. For
purposes of this section, groups that are not considered committees of
the legislature include, but are not limited to, groups that promote
particular issues, raise campaign funds, or are caucuses of members of
a political party.
(5) Federal per diem. The Federal per diem for any city and day is
the maximum amount allowable to employees of the executive branch of
the Federal government for living expenses while away from home in
pursuit of a trade or business in that city on that day. See 5 U.S.C.
5702 and the regulations under that section.
(e) Election--(1) Time for making election. A taxpayer's election
under section 162(h) must be made for each taxable year for which the
election is to be in effect and must be made no later than the due date
(including extensions) of the taxpayer's Federal income tax return for
the taxable year.
(2) Manner of making election. A taxpayer makes an election under
section 162(h) by attaching a statement to the taxpayer's income tax
return for the taxable year for which the election is made. The
statement must include--
(i) The taxpayer's name, address, and taxpayer identification
number;
(ii) A statement that the taxpayer is making an election under
section 162(h); and
(iii) Information establishing that the taxpayer is a state
legislator entitled to make the election, for example, a statement
identifying the taxpayer's state and legislative district and
representing that the taxpayer's place of residence in the legislative
district is not 50 or fewer miles from the state capitol building.
(3) Revocation of election. An election under section 162(h) may be
revoked only with the consent of the Commissioner. An application for
consent to revoke an election must be signed by the taxpayer and filed
with the submission processing center with which the election was
filed, and must include--
(i) The taxpayer's name, address, and taxpayer identification
number;
(ii) A statement that the taxpayer is revoking an election under
section 162(h) for a specified year; and
(iii) A statement explaining why the taxpayer seeks to revoke the
election.
(f) Effect of election on otherwise deductible expenses for travel
away from home--(1) Legislative days--(i) Living expenses. For any
legislative day for which an election under section 162(h) and this
section is in effect, the amount of an electing taxpayer's living
expenses while away from home is the greater of the amount of the
living expenses--
(A) Specified in paragraph (a)(2) of this section in connection
with the trade or business of being a legislator; or
(B) Otherwise allowable under section 162(a)(2) in the pursuit of
any trade or business of the taxpayer.
(ii) Other expenses. For any legislative day for which an election
under section 162(h) and this section is in effect, the amount of an
electing taxpayer's expenses (other than living expenses) for travel
away from home is the sum of the substantiated expenses, such as
expenses for travel fares, telephone calls, and local transportation,
that are otherwise deductible under section 162(a)(2) in the pursuit of
any trade or business of the taxpayer.
(2) Non-legislative days. For any day that is not a legislative
day, the amount of an electing taxpayer's expenses (including amounts
for living expenses) for travel away from home is the sum of the
substantiated expenses that are otherwise deductible under section
162(a)(2) in the pursuit of any trade or business of the taxpayer.
(g) Cross references. See Sec. 1.62-1T(e)(4) for rules regarding
allocation of unreimbursed expenses of state legislators and section
274(n) for limitations on the amount allowable as a deduction for
expenses for or allocable to meals.
(h) Effective/applicability date. This section applies to expenses
paid or incurred, or deemed expended under section 162(h), in taxable
years beginning after April 8, 2010.
PART 301--PROCEDURE AND ADMINISTRATION
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Par. 3. The authority citation for part 301 continues to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
Sec. 301.9100-4T [Amended]
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Par. 4. Section 301.9100-4T is amended by removing from the table in
paragraph (a)(1) ``section 127(a)'', and removing paragraph (a)(2)(iv).
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
0
Par. 5. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805.
0
Par. 6. In Sec. 602.101, paragraph (b) is amended to add in numerical
order an entry for ``1.162-24'' to read as follows:
Sec. 602.101 OMB Control numbers.
* * * * *
(b) * * *
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Current OMB
CFR part or section where identified and described control No.
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* * * * *
1.162-24................................................... 1545-2115
* * * * *
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Linda M. Kroening,
(Acting) Deputy Commissioner for Services and Enforcement.
Approved: August 27, 2009.
Michael Mundaca,
(Acting) Assistant Secretary of the Treasury (Tax Policy).
Editorial Note: This document was received in the Office of the
Federal Register on April 2, 2010.
[FR Doc. 2010-7932 Filed 4-7-10; 8:45 am]
BILLING CODE 4830-01-P