Photo: Dan Macy
Employers and “super commuters” — employees who live outside of the boundaries of the metropolitan area where they work — may wonder whether there are any tax breaks for someone who practically breaks their neck to get to their employer’s place of business.
A recent study by the Rudin Center for Transportation at New York University said a special class of commuters, called “super commuters,” has become more common over the last 10 years. It calls super commuting a “growing trend.”
But first, what is a super commuter? Super commuters might travel over 100 miles — say, from Boston to New York City — to get to their jobs, although not daily, using various modes of transportation. The study’s authors define a super commuter as someone who lives beyond the “census-defined combined statistical area” of their workplace, claiming that these workers make the trip once or twice per week. “Many workers are not required to appear in one office five days a week,” the study notes.
And where are these road warriors? Philadelphia — with nearly a 50-percent increase in super commuters since 2002, is one of the five fastest growing metropolitan areas for super commuting as of 2009, the study says, and Philadelphia already is among the five biggest super-commuting hubs. New York City is not among the five largest hubs, but it saw a 60-percent increase since 2002. Harris County, Texas, home to Houston, saw the biggest increase during that period — 98.3 percent.
“The international growth of broadband internet access, the development of home-based computer systems that rival those of the workplace, and the rise of mobile communications systems,” the study said, “have contributed to the emergence of the super commuter in the United States.
Tax Treatment
The tax Code is not kind to those who would like to write off their commuting expenses — the general rule is that commuting expenses are not deductible — but it might pay to look at a couple of federal tax court cases to get a feel for the complexity of the issue. The cases are Wheir v. Commissioner (T.C. Summ. Op. 2004-117), and Bogue v. Commissioner (T.C. Memo. 2011-164). You may also want to take a look at IRS Revenue Ruling (Rev. Rul.) 99-7. Both of these tax court rulings discuss Rev. Rul. 99-7.
“Transportation expenses incurred in going between a taxpayer’s residence and a work location generally are nondeductible commuting expenses,” wrote Jerry E. Holmes, a former IRS branch chief, now senior counsel at Morgan Lewis & Bockius, and a contributing editor of Thompson Publishing Group’s Employer’s Guide to Fringe Benefits. “There are, however, exceptions to the rule,” he wrote in a column. “The exceptions depend on whether the taxpayer (1) travels to temporary work locations outside the metropolitan area where the taxpayer lives and normally works, and (2) has one or more regular work locations away from the taxpayer’s residence and travels to a temporary work location in the same trade or business.”
Holmes was writing about a 2004 Tax Court ruling, Wheir v. Commissioner. Cory L. Wheir, who lived in Wisconsin Rapids, Wis., practically in the geographic center of the state, might have been called a super commuter at times, although he did not travel to the same place week after week as many of the super commuters the study described seem to be. He was a boilermaker who traveled to different job sites around the state. Wheir itemized deductions for mileage and living expenses incurred at work locations that were more than 35 miles away from home, but the IRS disallowed all of the claimed deductions on the ground that the expenses were “commuting expenses.”
Contact me dmacy@thompson.com and I will send you a copy of Holmes’ column, free of charge. If you want me to send it to you via regular mail, include your mailing address. Otherwise, you will receive a copy via e-mail.
Suffice it to say, the Wheir case revolved around the concept of a “metropolitan area,” complicated by the IRS’ view that Wisconsin Rapids was not part of one.
In Bogue v. Commissioner, the tax court judge rejected the concept of “metropolitan area” altogether. The taxpayer in Bogue was an independent contractor who worked with another individual renovating residential properties in the Philadelphia area.
What Is ‘Temporary?’
While these Tax Court rulings seem to get hung up on the geographic aspect of “metropolitan area,” Rev. Rul. 99-7 focuses more on the time element; specifically what “temporary” means. The revenue ruling says: “If employment at a work location is realistically expected to last (and does in fact last) for one year or less, the employment is temporary in the absence of facts and circumstances indicating otherwise.”
As you can see, the complications a super commuter faces aren’t limited to the vagaries of road, rail and air travel. If they want the best tax treatment, super commuters may have to travel through the jungle of the tax code, too.
I liked the tip, but my question was not quite answered.
My daughter has just taken a position in Washington, which means she has to do the “BIDEN” commute, Wilmington, DE to Washington D.C. This is time consuming and costly (approx. $1300.00 @ 4hours) Monday thru Friday. There should be some tax break.
I wonder about tax breaks if you are renting an apartment in one city, but then driving home to your primary residence on weekends. Is the rent and living expenses at the small apartment deductible?