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Staffing Agency Services:
Having started in the Healthcare Staffing Industry, we are keenly aware of the needs of "contingent" professionals and their employers. Whether you provide staffing for the healthcare, nuclear, engineering, IT, or other industry, our reimbursement / per diem policy services can help you with:
- Reimbursement policy formulation
- Review of current documents and workflow related to your reimbursement policy
- In house recruiter/staff training to help implement any changes to your reimbursement policy or to provide annual training courses for new staff
Please contact us for further information on how we can serve your company.
- Recruiters are one of your most important assets. If a traveler finds a recruiter they trust, they will be loyal to that recruiter, even follow them if they change companies. Facilitating that relationship not only provides a source of new travelers (travelers are very vocal about great recruiters), it reduces the “soft costs” associated with the processing of a new employee.
- A knowledgeable recruiter is indispensable. One of the many items that a recruiter has to explain is the nuances of your reimbursement policy. Travelers are understandably confused over their travel, lodging, and meal per diems/allowances, how these fit into their paycheck and how they qualify. Many do not even know where to start to look for information in these areas and often in the rush of signing contracts, they will ask their recruiters for advice on how to fill out their tax home statements, W4, and other forms.
- While it is always best to direct them to a tax professional, there is basic information that a proficient recruiter can pass on to their travelers. Our in-services help to ensure that what is said (and what is not said) is correct, reduces your risk should a complaint be filed and possibly, more importantly, we try to dispense with the myriad of myths and rumors propagated by your competition.
- As one of the primary contributors/editors to NATHO’s tax best practices paper, our presentation will help you stay current with industry practices. After the training, we continue to be a resource for your staff, answering any questions that arise and heartily welcome any travelers you refer to us for assistance with their tax filings or even the random question.
- Recruiter In-Services are available in multiple forms: Live (where we come to you) or online. Please contact us for more information.
We have accumulated a trove of cases, rulings, advisories and audit intelligence over the many years that we have served the staffing industries. Reimbursement practices are heavily audited and contribute to a significant portion of the “Tax Gap” the IRS wishes to close.
Developing a robust reimbursement policy for your company, and implementing the workflow to make that policy work, is a complicated affair that requires much thought.
Joseph Smith, TravelTax's founder, serves on the tax compliance committee of the National Association of Travel Health Organizations (NATHO) and is a significant contributor to the Tax Policy Best Practices and its complimentary documents for Travelers.
According to IRS pub 463, a job is far enough away if "you need to sleep or rest to meet the demands of your work while away from home." If that rest takes place at or near the traveler's tax home, it does not qualify, regardless of distance.
Many companies will use a policy of a 50 mile radius; however, it should never go further than an internal screen. There is no such thing as a 50 mile rule in the tax code that allows one to qualify for tax-free housing allowances. Only elected state legislators have that provision. While the desire for a mileage threshold is understandable, the more important question is: where is the traveler spending the night? While a company cannot be expected to police their employees, there must be a reasonable expectation that the traveler is getting their sleep "away from home" Depending on what part of the country you are in, 50 miles can be covered in a 40 minute commute, too short to be justified as a travel assignment. Tax-free housing allowances must accompany housing expenses at the assignment. Following a 50 mile rule does not ensure that.
We wish we could give a succinct answer here. Then we would print it on gold paper, seal in platinum, sell one to each staffing company, and retire on the proceeds.
To help avoid the liability of wage recharacterization, a staffing agency needs to have a written policy that lays out the administration of their reimbursement program. This is an area that one method may sound quite reasonable, yet be grievously in error. All we can do here is to offer to talk it over with you. Please give us a call.
The practice of willfully reducing wages (taxable income) and replacing it with non-taxable compensation with the intent of avoiding payroll taxes. This can be suspected in a number of ways. Below are just a few examples:
1) A company having a number of travelers working at the same location, one gets $30/hr wages plus $7/hr reimbursements and another gets $20/hr plus $17/hr in reimbursements. (Note both are getting the equivalent of $37/hr.)
2) Presenting contracts that offer the choice of picking between a taxed wage and the option of a reduced rate with tax-free reimbursement payments in its place.
While ultimately the taxpayer is responsible for representing themselves accurately and paying the correct amount of income tax, there is some due diligence that the employer is responsible for in screening the existence of a tax home with their employees. In all honesty, this is not much different from requesting copies of an employee's professional license and photo ID.
Tax home statements can be detailed, showing that a reasonable attempt was made to evaluate the employee's status before giving thousands of dollars in tax-free reimbursements, or they can be so basic that they require nothing more than a signature after a one-sentence statement. The latter example could be deemed as self-serving, encouraging the employee to sign off on it without serious consideration. Our extensive experience has shown us that In the case of a company audit, the IRS is often interested in the appearance of intent.
Feel free to contact us to have your tax home statement evaluated.
We are always happy to answer a quick question, but if 30 minutes or longer is needed, we will have to set up a consult which involves a fee. We realize the importance of educating travelers, recruiters and staffing agencies and we have dedicated a portion of our business to this effort.
Should you find that you need substantial advice or an ongoing relationship, we can set up a consultation agreement for further discussions.
It is amazing how many fine details are involved when you start a business! You think it will be just a matter of keeping records of income and expenditures, then you find out you are responsible for following hundreds of regulations you never knew existed. When you go to read these regulations, you don’t even understand the terms they use to define the regulations. A double disadvantage.
Yes, we can help. Since so much of our tax business involves education, we can start at the beginning and explain the tax issues step by step. Give us a call, meanwhile, you can go over to the Q&A that we have on the Traveler page.
Per diems are a “both or nothing” kind of thing. When a company pays a per diem for housing, and even states that it is for housing only
, as far as the IRS is concerned, that payment is 60% for housing and 40% for meals. Also, when a company pays less than the total amount of the combined per diem (housing & meals), the same occurs. The official regulations can be read at: IRS Rev Proc 2011-47
, section 6.05.
As always, there are exceptions: When a company directly pays for housing or reimburses an employee for the exact cost of housing (per physical receipts), then a meal allowance is optional, up to the prevailing rate.
On the company side that means if you only provide a housing stipend or allowance, but no meals, you must split that amount 60-40. And the 40% portion allocated to meals falls under the 50% meal allowance limitation. Ultimately, your company loses a portion of the total stipend to meal deduction limitations.
Only when you directly bill the client for the meals can you claim a 100% deduction for meals.
For the traveler’s tax return, the unspecified stipend (or housing only stipend) must be split and 40% of it gets credited against the total cost of meals the traveler claims. The flip side is also true, if only 60% of the stipend applies to housing, any additional expenses over that amount are now deductible, but accurate receipts and records need to be kept.