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Jiggie

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Losing per diem
« on: Jul 12, 2010, 11:49 »
I was employed by a contract company in an outage starting in Sept. last fall. I was laid off and had an approx 6 1/2 week break over the holidays returning to work at the same site mid January. I was asked to stay after the spring outage with no end date quoted and no guarantees. They told me at the time, I would lose my per diem Sept 7th since I would have been on site for one year without 8 weeks contiguous unemployment. I agreed to stay with my pay rate going up quite a bit when I lost my diem.

Now, the utility is saying no go on the pay increase when you lose your diem. I told them I would be leaving to work other outages this fall since I could make far more doing that than staying here. I applied for some outages through my current contract employer who apparently had no issues with it at the time and I was accepted at one of my choices last week.

I walk in this (Monday) morning and get a call from the contract company informing me that even if I leave here and work outages elsewhere, I will still not get per-diem since I have not had 8 contiguous weeks of unemployment. At first I was hearing 8 contiguous weeks at this site. Now all of a sudden its 8 contiguous weeks in one year period and no per diem anywhere

Anybody ever hear of this type situation?

stownsend

  • Guest
Re: Losing per diem
« Reply #1 on: Jul 12, 2010, 01:35 »
They (both) are making things up as they go. Each company can offer per diem or not. There are many threads on per diem on this site.  Some company's and many techs think if they take a break or vacation the clock starts all over again. They are all in for a surprise when they are given the final tax bill after interest and penalties.
There is no such rule having to be unemployed for eight weeks before you are eligible for reimbursement again.If you work at one site then take eight weeks off and go back to the same site you probably won't win.There are rules of being away from your home and having duplicate expenses. Some people and companies think there is a hard fast one year rule. The day you are told the job will exceed one year in duration that is the day you're not eligible anymore.If you work one site(<1 year) then go directly to another short term (<1 year) job you are still eligible if you have a permanent home elsewhere. Please look up the rules posted on this site or even better spend a little bit of that money and talk to a tax professional like the tax consultatant who posts/ advertises here.
« Last Edit: Jul 12, 2010, 01:36 by stownsend »

BetaAnt

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Re: Losing per diem
« Reply #2 on: Jul 12, 2010, 02:30 »
The only IRS provision (buried deep in the code and case files) is a 90 day separation for the same site. But the case may be 'The Golden Rule' (He who has the gold makes the rules). Unemployment doesn't count. Site separation counts only. Ex. I work for Company A at site B for more than one year, my per diem will be taxed as income after a year. If I transfer to site C (more than 50 miles from my primary residence), I draw the tax free PD at site C. You can draw per diem more than a year, tax free, provided you are not in one place more than a year.
Your company is playing with your money. Time to switch companies or bite the bullet.

Jiggie

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Re: Losing per diem
« Reply #3 on: Jul 12, 2010, 04:57 »
I contacted a tax professional that I found on this forum prior to this post but thought I would solicit additional comments and experience. If by "look up the rules posted on this site" you mean the standard look for your answer prior to posting a question, I did that as well but didnt find anything that anwered my questions well enough.

Offline Already Gone

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Re: Losing per diem
« Reply #4 on: Jul 12, 2010, 07:39 »
Sounds like you are getting jerked around.  Or, maybe you are hearing and understanding it differently from the way they are telling you.
Per diem is simple.  They can offer it if they want and not offer it if they don't want.  If they offer it, they have to do it by the rules.
One of those rules is that the assignment has to be temporary.
Temporary means 1) has a definite end date, 2) the definite end date is less than a year from the start date.  If at any time, the end date is expected to be longer than a year after the start, OR if it was never definite to begin with, then the job is NOT temporary.
Another rule is that it has to be away from you tax home for longer than one day.  Your tax home is the place where you live when you are making most of your money.  If no single place fits that criterion, then you either have no tax home (and therefore are never eligible for per diem) or your tax home is the place where you maintain a home and intend to return when you are not working on the road.

BetaAnt is incorrect about several things.
There is no rule concerning a 90 day separation or an 8 week unemployment span, continuous or not..

Per diem NEVER becomes taxable after a year.  If it is paid when it is not according to the rules above, it is taxable PAY - NOT PER DIEM.  However, that occurs at the moment that the job is EXPECTED to go over a year or when there is no definite end date.  In that scenario (someone takes a long term job knowing that it is long term) the per diem, if paid, is taxable on day one --not on day 366.
Likewise per diem never disappears after a year.  If it wasn't a temporary job, it should never have been paid at all.  
Basically, the companies who take per diem away or tax it after a year, were not supposed to be paying it in the first place.  Those companies are just digging you a hole.

You need to clarify WITH THE CONTRACT COMPANY what they are telling you.  I don't think they mean that you won't get per diem at some other site.  If that is what they are telling you -- call a different company who knows what the hell they are doing and work for them instead.
« Last Edit: Jul 12, 2010, 07:44 by BeerCourt »
"To be content with little is hard; to be content with much, impossible." - Marie von Ebner-Eschenbach

Offline Incline

Re: Losing per diem
« Reply #5 on: Jul 12, 2010, 07:55 »
Quit, leave, go to work for the competition or at lazy H. I have a friend that has been in training classes since May, and has a few more weeks to go till he is qualified. It's been a nice 8 week job for him so far. javascript:void(0);
I bet i can guess what site you're at now. Something similar happened to me a few years back, except i could get perdiem at the site i was going to. Sounds like your company is trying to do a number on you.

stownsend

  • Guest
Re: Losing per diem
« Reply #6 on: Jul 12, 2010, 10:52 »
I contacted a tax professional that I found on this forum prior to this post but thought I would solicit additional comments and experience. If by "look up the rules posted on this site" you mean the standard look for your answer prior to posting a question, I did that as well but didnt find anything that anwered my questions well enough.
Jiggie
Many people have debated per diem on this site and have posted alot of the rules.Beercourt is giving you the truth.Search what Beercourt has said many times before.Camella posted this.
Here is what the IRS says....


Temporary vs. Indefinite Travel Assignments

Reimbursements of travel expenses for "temporary" assignments away from the tax home are generally not taxable to the employee. If the assignment is "indefinite," the employee is considered to have moved his/her tax home to the new work location. Reimbursements of expenses for "indefinite" travel are taxable. The employer must determine whether an assignment is realistically expected to last less than one year when the assignment begins. .
Rev. Rul. 93-86; Rev. Rul. 99-7

An assignment is generally considered temporary if it is realistically expected to be, and does in fact lasts, one year or less.
An assignment is generally considered indefinite if it is realistically expected to last, and does in fact last, for more than one year.
These rules apply unless the facts and circumstances of the case clearly indicate otherwise. All relevant facts must be considered to determine whether the travel assignment was intended to be temporary or indefinite. Rev. Rul. 93-86; Rev. Rul. 93-7


Temporary" Travel Assignment Becomes "Indefinite"
If an assignment away from home at a single location is, initially, realistically expected to last one year or less, and then later it is realistically expected to last longer than one year, the assignment is considered temporary until the date the expectations change. At that time, the travel is considered "indefinite" and any travel reimbursements from this date on are taxable.

(retrieved March 16 2010 from http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf)
I'm not trying to steer you wrong or be a smart a**.Don't go into this blind and end up in trouble.

stownsend

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Re: Losing per diem
« Reply #7 on: Jul 12, 2010, 10:55 »
[quote

Anybody ever hear of this type situation?

[/quote]

simple answer=no

Content1

  • Guest
Re: Losing per diem
« Reply #8 on: Jul 13, 2010, 01:26 »
If you are not offered per diem, either spend time with a tax accountant and follow their advice or go work someplace else.   It is a free market and if you are able to stay at the same place for over a year, and they don't want to pay you more if you lose per diem, go someplace else.   I left a couple of jobs when I came up to a year and avoided the whole issue.

atomicarcheologist

  • Guest
Re: Losing per diem
« Reply #9 on: Jul 13, 2010, 09:41 »

Anybody ever hear of this type situation?


That is a new one.

I'd inform my contract employer that I would be going to work for other companies and would inform them of when I had a contiguous 8 weeks phase completed.

Then I'd make the calls to the other companies and most likely be surprised at the extra money being offered.

Then I'd open a cold sody pop and jump in the pool.   :)

RAD-GHOST

  • Guest
Re: Losing per diem
« Reply #10 on: Jul 14, 2010, 04:00 »
I was employed by a contract company in an outage starting in Sept. last fall. I was laid off and had an approx 6 1/2 week break over the holidays returning to work at the same site mid January. I was asked to stay after the spring outage with no end date quoted and no guarantees. They told me at the time, I would lose my per diem Sept 7th since I would have been on site for one year without 8 weeks contiguous unemployment. I agreed to stay with my pay rate going up quite a bit when I lost my diem.

Now, the utility is saying no go on the pay increase when you lose your diem. I told them I would be leaving to work other outages this fall since I could make far more doing that than staying here. I applied for some outages through my current contract employer who apparently had no issues with it at the time and I was accepted at one of my choices last week.

I walk in this (Monday) morning and get a call from the contract company informing me that even if I leave here and work outages elsewhere, I will still not get per-diem since I have not had 8 contiguous weeks of unemployment. At first I was hearing 8 contiguous weeks at this site. Now all of a sudden its 8 contiguous weeks in one year period and no per diem anywhere

Anybody ever hear of this type situation?


NOTICE....I think they gave you notice, but you didn't notice!

I believe it was in the same category as Juniors requiring less Per Diem to live on the road.... ::)

RG!

Offline traveltax

Re: Losing per diem
« Reply #11 on: Jul 20, 2010, 08:52 »
As the other posters have mentioned, so long as your company is within the IRS guidelines, they can decide for themselves how they pay per diems and at what point those payments become taxable due to your length of stay. A company can follow a stricter interpretation of the tax code if they wish.

The tax code and related authority are clear that you must be away from your tax home (which is not a permanent residence by the way), overnight and engaged in a temporary job assignment to qualify for tax free per diem/stipends/allowances etc. Your tax home can shift once you have committed to staying beyond 12 months or due to repetitive and frequent engagements in the same area. These rules are only by exception as empirically, a tax home is where you make your income- not where you live. Where you live can be your tax home given the above is followed along with the other criteria that make up the set of exceptions.

In other industries that employ temporary staff, there is a constant struggle in defining when an employee’s tax home shifts and how to address this is a manner that will pass an audit. If the IRS where to find fault in a company’s reimbursement program, they would be subject to some heavy penalties. In all my years doing tax work in the contingent staffing industries (temporary staff companies), this is not the first time I have heard of a requirement of a period of unemployment. I have seen other companies require a 30 day break from any employment each year or a 45 day break every two years. I have never heard of something specific as your issue requiring an 8 week break of unemployment. Once you approach a year in service, you need to go elsewhere and have a significant break from the area. IRS chief counsel has indicated that 7 months is the minimum time allowed for another 12 month engagement.

The one issue that needs to be dealt with is your statement: “I was asked to stay after the spring outage with no end date quoted and no guarantees”.  Since there is no end date in sight, you have taken a permanent position. It may seem temporary to you, but contractually, this is an open ended, indefinite arrangement in the eyes of an auditor and a shift in your tax home to the area where you are working. If there is an understanding that this is a temporary job lasting less than a year, then we can look at this as a qualifying engagement. Of course, you must take into account your past service in this area as well.

I get the feeling that everyone involved in your situation is not communicating on the same terms. Does unemployment mean an absence of labor or a break in service? Do the additional people involved understand what the others already said? If possible, you may want to get a third party involved who can sift through the verbiage. I have often called recruiters on behalf of my clients for that reason.
Joseph Smith EA/MS Tax
Enrolled Agent, Admitted to Practice Before the IRS
TravelTax TravelTax Canada
www.traveltax.com info@traveltax.com

Offline Rennhack

Re: Losing per diem
« Reply #12 on: Jul 20, 2010, 10:14 »
Joe,

I sure am glad you are here.  I think your understanding on the subject rivals ANY other person I have met.

It seems that we may not like the truth, but there it is.

 


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