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Regs detail the 50% deduction limit for leased employees

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in Office Management,Payroll Management

There’s more to leasing employees than clients ­remitting their pay to the leasing company. Employees who incur meal expenses are usually reimbursed for those expenses. Snag: While employees can be ­reimbursed 100% for their substantiated meal expenses, business deductions are limited to 50%.

Normally, the employer is stuck with this deduction disallowance. But the involvement of the leasing company complicates matters. Proposed regulations assign the deduction disallowance to the party—the client or the leasing company—that receives an accounting of expenses.

The regs won’t become effective until final regs are issued, but you may rely on them for any tax year for which the statute of limitations has not expired. (77 F.R. 45520, 8-1-12)

Reimbursement arrangements clarified

The regs clarify that a reimbursement or other expense allowance arrangement involving employees is an arrangement under which employees receive advances...(register to read more)

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