The rules that govern which travel expense claims are deductible are always changing. On October 1, new per diem rates set by the IRS took effect, requiring most US businesses to make adjustments in how they report travel expenses. Keeping up with these ever-evolving regulations is a major challenge in travel expense management. An automated expense policy is the starting point for managing these challenges more effectively.
The IRS per diem rates are used to set employee allowances for meals, lodging and incidental expenses, and the updates apply to travel in late 2013 and 2014, according to accounting news website AccountingWEB.com.
Here are some of the changes that organizations will need to account for in their travel expense management.
- Per diem rate adjustments. The IRS rates are now $170 per day for meals, lodging and incidentals within the continental US and $210 or higher for travel in specified high-cost areas. Of these rates, the portions applied toward meals are $59 and $65, respectively.
- Incidental expenses redefined. The daily rate is $5 anywhere inside or outside the continental US. According to an IRS document outlining the new regulations, this rate covers only specific fees, like tips given to baggage handlers and hotel staff.
These IRS rules represent changes to 2012 regulations, which in turn modified 2011 guidelines, AccountingWEB.com reports. And these are only the federal regulations on travel expenses. The complexity grows exponentially for organizations that work across state lines or international jurisdictions. Local, state, national and international tax laws are often very different in scope and reporting requirements, so company travel and expense policies must be put in place and enforced to minimize corporate exposure to financial and operating penalties.
Your organization can’t afford to make mistakes with the IRS. You also can’t afford to spend time retraining employees on how to report expenses each time there’s a change. Automating these policies through expense report software like Chrome River EXPENSE can help organizations quickly adjust to this changing environment and easily update rates, setting the stage for potential savings and mitigating risk.
We appreciate your feedback. How will these new IRS regulations affect business travel in your organization? Share your thoughts below in the comments section!
- Buy, Pay, Expense: Save Time on Amazon Business Expenses with Chrome River and Mastercard
- Bringing in a New Era in Corporate Payments with Emburse Pay
- Gartner and Ardent Partners Advise How to Build a Best-in-class Accounts Payable Operation
- When Cash (Control) is King: Is Your Accounts Payable Strategy Optimized for a COVID-19 World?
- Getting the Most Out of Your Spend Data with Emburse Insight Advisor
Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.