Revenooer rants: Commuting expenses non-deductible
Ryan Summerlin June 12, 2013
In a not particularly surprising ruling, the Third Circuit Court of Appeals recently slapped a taxpayer for trying to deduct his “commuting” expenses — a longstanding “no no,” which most folks have come to understand.
During 2005 and 2006, the taxpayer worked with an associate on the renovation of residential properties. All of his projects were proximate to his residence — ranging between about four and twenty miles away. The sole proprietor taxpayer attempted to deduct car and truck expenses, tolls and auto insurance, all of which the Tax Court (and later, the Third Circuit Court) disallowed as nondeductible personal expenses.
Costs of commuting between a taxpayer’s residence and place of business are generally nondeductible personal expenses, with three exceptions:
1. Transportation between the taxpayer’s residence and a temporary work location outside the metro area where he lives and normally works is deductible (“temporary distant workplace exception”).
2. If the taxpayer has one or more “regular work locations away from the taxpayer’s residence,” transportation between the taxpayer’s residence and a temporary work location is deductible (“regular work location exception”).
3. Transportation between the taxpayer’s residence (if it serves as his principal place of business) and a regular or temporary work location is deductible (“home office exception”).
Our guy claimed the “regular work location exception,” arguing that the bank and various building supply stores he visited were regular work locations for him, though the courts observed that the taxpayer did not establish that he worked or performed services at any of those locations! Nice try.
The Third Circuit said that construing a building supply store or bank as a “regular work location” strains the meaning of “work location,” inasmuch as the taxpayer was at those locations as a customer, not a worker!
And from this week’s “good news from Obama” department comes word that he’s not actually trying to put all of you out of business after all. In a speech at one of his recent fundraising activities, the Big O noted, “We don’t want to tax all businesses out of business…but we do think that there’s a role to play for government.”
And speaking of commuting costs, get a load of the latest from North Carolina — and perhaps soon to be coming to a state near you: new fees for hybrid and electric car owners to help make up for revenue lost because drivers of those newfangled machines aren’t paying as much gas taxes on their fuel-efficient vehicles!
“I think so far what we’re seeing is the trend seems to be either an additional annual fee or some type of registration fee seems to be much more popular than the miles-driven tax, because that is a newer technology and raises some privacy concerns,” quoth Kristy Hartman, a transportation and environment analyst at the National Conference of State Legislatures.
CONSULT YOUR TAX ADVISER – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation. Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He may be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at email@example.com.