Keeping up with tax laws and requirements is a challenge for residents and businesses in Dallas, Texas, and throughout the country. Many residents may not be aware of what is called Long Term Taxable Travel, or LTTT. This tax comes into play when someone travels to and from a principle work location for over a year. Expense reimbursements for that travel may be taxable under the LTTT provision. Failure to pay taxes on any income, including expense reimbursements that qualify for LTTT, can result in penalties and interest.
According to news reports, a recent audit of IRS executives revealed that nine individuals may not have paid appropriate taxes on travel reimbursements. A report indicated that the average reimbursement in those nine cases was $51,420. Travel bills for some IRS executives in 2011 totaled over $100,000, according to the report.
The average number of travel days for the nine executives in question was 140.5. According to the report, that travel qualified as LTTT but was not appropriately classified on tax documents. The executives lived in cities other than Washington, DC, including Dallas, and used planes to travel to their work each month.
Reportedly, a review of records indicates that some of the executives that should have paid taxes on travel expenses did have those taxes retroactively calculated. One employee of the IRS told a news reporter that regular taxpayers would have been charged penalties and interest on the unpaid taxes. The report also indicated that until Jan. 2012, the IRS did not have a system for ensuring employees filed LTTT taxes appropriately.
Ignorance of tax laws does not get a person or business off the hook for taxes owed. In most cases, failure to pay taxes in a timely manner also results in large interest and penalty charges. Understanding tax legalities and having the ability to negotiate with the IRS for things like an offer in compromise can help regular taxpayers avoid serious financial woes when faced with tax issues.
Source: WSB Radio, “Audit: IRS execs sidestepped travel tax laws” Jamie Dupree, Feb. 19, 2014