IRS Notice 2007-47 – Deductibility of Lodging Expenses

[TaxMama note: This looks like a really important announcement. Especially if it means what I think it means!

OK, I am sitting here trying to get my head around this phrase “not incurred in traveling away from home”. And I think I have it finally figured out – but have a call in to IRS spokesperson Nancy Mathis for clarification.

Here’s what I think this means – for those of us who go to meetings, conventions, workshops, etc., that require us to stay overnight in a hotel, even though we are not far from home, I believe that IRS is saying that those are legitimate business expenses. AND that if you’re presently in the middle of an audit where you’re about to get those deduction thrown out – that audit will be put on hold until IRS can write up their specific guidance on this issue.

In other words, you will be getting credit for those expenses. YAAAAAY! ]

The Service and the Department of the Treasury expect to amend § 1.262-1(b)(5) to provide that the costs of a taxpayer’s lodging not incurred in traveling away from home are personal expenses and are not deductible unless they qualify as deductible expenses under § 162 or 217.

Pending the issuance of additional published guidance, the Service will not apply § 1.262-1(b)(5) to expenses for lodging of an employee not incurred while the employee is traveling away from home that an employer provides to the employee, or requires the employee to obtain, under the following conditions:

(1) The lodging is on a temporary basis;
(2) The lodging is necessary for the employee to participate in or be available for a bona fide business meeting or function of the employer; and
(3) The expenses are otherwise deductible by the employee, or would be deductible if paid by the employee, under § 162(a).

This issue will not be raised in any taxable year ending on or before publication of the guidance and, if already raised as an issue in examination or before the Office of Appeals or the Tax Court in a taxable year ending on or before May 23, 2007, the issue will not be pursued by the Service.

For more details:

  • Ask TaxMama :: Where taxes are fun and answers are free

  • IRS Notice 2007-47 :: Amending § 1.262 – Business lodging while not away from home