Career Path > Money Matters

Per Diem Docking?

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Already Gone:

--- Quote from: halflifer on Apr 14, 2005, 12:12 ---Also, talk to a lawyer if they are docking your per diem and didn't stipulate this at the time of hire. Per Diem means 'by the day' so you may be able to recover it if docking for time off wasn't a clear condition of hire.

--- End quote ---

If they are docking your per diem, they are ostensibly doing it because you did not have reimbursable expenses that were business related for that day.  There are a lot of conditions in that sentence.  If they find out that you spent the day playing golf, your expenses for meals and lodging are not business related.  If they find out you checked out of the hotel and took a three day weekend, then you didn't have any meal and lodging expenses that were reimbursable.  (You do have the right to deduct the cost of the trips home at reasonable intervals, but the "oral contract" does not obligate the employer to pay you perdiem on those days).
If they find out you were staying at a friend's apartment, or getting deal at a hotel, they can make you repay the excess per diem.
Oral contracts are enforceable as has been pointed out (I have won a lawsuit based on an oral contract - I'm still waiting to get the money) but you had better make sure that you get all the facts out in the open.  If the recruiter says "the job pays $24 and $90" you should make him say "the job pays $24 per hour and $90 per diem for every day of the assignment."  Then you need some way to prove that they said those words.  An oral contract that you can't prove existed is worthless.  They have the absolute right to claim that the oral statement was meant to convey that they intended to pay the $90 in accordance with all applicable tax laws.  You have no legal recourse if you claim that it was supposed to mean otherwise, since a contract to violate the law is not a contract at all - it is a conspiracy - and you can't get any court of equity to enforce it.

Although per diem means "per day" the deduction you can take on your income tax return is the total amount for the entire year of expenses less reimbursements.  If you read the stuff quoted and cited above, you will find that there is no provision for claiming a deduction for the difference between CONUS and actual per diem.

The bottom line is this:  If they docked your per diem because you were not at work - you almost certainly are not going to get that money.  Tax law and contract law aside, there is just the reality of the thing that you have to consider.  The question you have to ask yourself is whether it is worth the trouble.  "Is the juice worth the squeeze?"  How much can you gain, and what will it cost you to get it?

RDTroja:

--- Quote ---If they find out that you spent the day playing golf, your expenses for meals and lodging are not business related.
--- End quote ---


That has nothing to do with perdiem eligibility. Perdiem is for your expenses when you are away from home to work. It doesn't matter if you are working, playing golf or mountain climbing on any given day. You still have to eat and have a place to stay. That is why you get it for 7 days when working 5 or 6 (or even 4). It is for the money you have to spend because you are not at home. What are you supposed to do on weekends or days off? Sit in your hotel room? Starve? If you start claiming that you treated other people to meals, that is a problem, but your own meals are fair game, golf or no.

One of the good things about perdiem is that it is how the government pays their own, and they are less likely to scrutinize it unless you start playing games with it. It covers any reasonable expense that is caused by being away from home. If you get paid less than it costs, you can claim it. If it costs less, there is very little liklihood they will ever question it as long as you are inside the guidelines. The real trouble comes when it is abused on a grand scale, and is combined with other questionable practices. That is how they finally got to IRM... the perdiem mess was part of a bigger business scam. But for individuals, it is a lot less complicated. Don't claim extra unless you can back it up.

Rennhack:
One of the points Troy was trying to make (He made MANY great points) was that the employer MUST make sure his "Per Diem Plan" is Accountable.  If not, no one gets Per Diem.  Part of being accountable means that they can not give you Per Diem if you do not meet the strictest of tax law standards.  AND they MUST take back any Per Diem that you are not eligible for.

I have performed countless hours of research on this subject, I have read every document cited in my message above.  I have stayed current on this aspect of the tax law for 15 years.

Of the published material, there is only one mention of anyone ever trying to get the difference between the amount of Per Diem furnished by your employer’s ACCONTABLE plan and the CONUS rate.  That one mention admitted he had been audited.  He claims to have come through the audit in tact.  Do you want to test it?  Do you want to flag an Audit?  Is it REALLY worth it?  Only YOU can answer those questions.

If you DO try to claim the difference, I do have one suggestion:

Make sure you allot the correct percent to MSIE, which is only 50% deductible.

If your employer gave you $65/day, and the CONUS is $91 ($60 Lodging, and $31 MSIE) then you have to claim $42.86 of your DIEM as Lodging and $22.14 as MSIE.  Of the “missing” $26, you would write $17.14 down as unpaid Lodging and $8.86 as unpaid MSIE, of which only half is deductible, i.e. $4.43.

If you are in the 15% tax rate (AGI <30k), your tax savings would be $3.24 a day.

Is $3.24 worth the audit?

Let’s say you have 60 days in the spring and 60 days in the fall that you can take the extra $3.24, you would see a total tax saving of $388.29.

Personally, I rather work 10 more hours of OT than challenge the IRS for $388.29


Of course… If your AGI is 72 – 150k, you are in the 28% bracket, and if you had to work 11 months to get in that bracket, and you were only paid $50/day; your tax savings would be $3,190.75

Summary: 

You worked 4 months, earned 29k AGI, was paid $65 of $91 Per Diem; your tax savings would be $388.29

You worked 11 months, earned 73k AGI, was paid $65 of $91 Per Diem; your tax savings would be $3,190.75

RDTroja:

--- Quote from: Rennhack on Apr 17, 2005, 10:16 ---One of the points Troy was trying to make (He made MANY great points)...
--- End quote ---

I am not disputing his accuracy or that he made great points... only the part about golf. Now that I have reread the post, I assume he was talking about claiming perdiem for a golf trip which was not the topic, so I missed it (however, if I found a company that wanted to pay me perdiem to take a golf trip I might have a hard time turning it down). My comment was that if you are on a job that pays perdiem, it does not matter what other activities are involved, you still get the perdiem.

Already Gone:
Actually it was neither.  I was referring to playing golf on days that you were supposed to be at work.  If you have Saturday and Sunday off (or any other day for that matter) you are entitled to per diem because you are spending those away from home for work related reasons.  The weekend is work related because it's more reasonable to stay over rather than go home.
It is those Fridays and Mondays that you take off to stretch the weekend that get you into trouble.  Lots of us have gotten our full week's pd when we asked for a day off.  Lots of us have gotten three days' pd docked for not showing up on Monday.  Expenses for Saturday and Sunday are not work related if they are not sandwiched between two work days.
The start of the thread was ostensibly about the expectation that per diem be paid for certain days not worked, and that some people get it when others don't.  As Mike has pointed out, they just can't give it to you.  The plan has to be accountable.  When the payee isn't accountable (i.e. can't or won't account for unexcused absences) then the plan is not accountable.  If you take time off for being sick, you are not eligible for per diem under an accountable plan unless it is only a short time that your employer excuses you during the course of a job.
People who expect to get per diem without being accountable are really asking the company to put all the other employees at risk.
So, if you are playing golf on a work day, invite the Site Coordinator and call it a business related outing or you're going to pay a little more than greens fees and dollar skins.

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