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Show The National Enterprise , March 23, 1977 Page fourteen Compliance with IRS Rule Wastes Both Time and Money The accounting firm of Arthur Young & Company has urged revision of a recent Internal Revenue Service ruling on business travel that they believe would result in needless fuel consumption, expense and lost time. At issue is an IRS ruling requiring that deductible business travel originate from an office and not from an employees home. Under the ruling, which is effective April 1, 1977, an employee would be required to travel first to his office and then to his client in order for the travel expenses to the client to be deductible and to avoid withholding tax on reim- bursement from his em- ployer. Businesses and professional firms with employees who travel to and from client's offices will be directly affected. In a letter to the Com- missioner of Internal Revenue, the firm cited a theoretical example to illustrate the problem. "Assume an employee lives ten miles south of our local office and must travel to a client which is located fifteen miles south of the Under employees home. Arthur Youngs reimbursement policy, if the employee travels directly from his home to the clients office to perform a full days services and then returns directly home, for a total travel distance of thirty miles, the employee must bear directly the travel expenses for twenty miles (the round trip distance from his home to the local office) and the firm reimburses him for the remaining ten miles traveled. Under Example (8) con Corporate Earnings- tained in Revenue Ruling the reimbursement received by the employee for this excess travel would constitute gross income to the employee subject to wage withholding and no allowance of an offsetting deduction. On the other hand, under this new ruling no gross income would be recognized by the employee if he were to first travel ten miles from his home to the office, turn around and travel miles to the twenty-fiv- e clients office, and at days end again travel twenty-fiv- e miles back to the office, and return home. Such a travel schedule would relieve the employee of the tax consequences otherwise resulting from direct travel, with very little other than time, expense and fuel sacrificed to accommodate the Ser- - Artco Bell Corp. 1st Qtr., Feb. 28 1977 Revenues Net Income 2,600.000 66,917 Earningsshare .09 1976 1,800,000 9.281 .01 76-45- 3, vices position. Robert E. Hanson, director of tax practice for Arthur Young, pointed out there is no dispute about the of ordinary commuting between home But this IRS and office. and many ruling places us in the ludicrous others position of having to direct our employees to fashion their travel schedules to avoid taxes and not to reach their business destination in the shortest and most economical way possible. In this era of energy shortages and conservation of natural resources, it is difficult, if not impossible, to accept such requirements, he said. The firm stated in its letter that the ruling in dispute represents a significant reversal of IRS practice and that if such a change is considered necesnon-deductibil- sary, federal legislation would be appropriate. . Contran Corp. 1st Qtr., Dec. 31 1977 Revenues Net Income 1,030,000 (2,690,000) Earningsshare 1976 4,285,000 654.000 .13 . Lets say your men make four per day. They chew up at least 15 minutes hunting a phone, dialing the call, hustling back to the job. Thats one productive hour. . .$20 wasted per day (hourly rate for driver call-in- s vehicle.) Let us show you howa JOHNSON TWO WAY RADIO SYSTEM WILL PAY FOR ITSELF. CONTACT US NOW FOR FREE SYSTEM CONSULTATION. CUSTOM MADE GOLD AND SILVER JEWELRY CUSTOM MADE WEDDING BANDS VKTZKH SUTIS COBMRIMTIIRS, IRC. 3244SOUTH300WEST SALT LAKE CITY, UTAH 84115 (801)486-843- 6 TELEPHONE (801) 42754 FIFTH AVE. 359-140- 1 SALT LAKE CITY, UTAH 84103 |