R
O
B
E
R
T
E
.
M
C
K
E
N
Z
I
E
,
E
S
Q
.
A
R
N
S
T
E
I
N
&
L
E
H
R
L
L
P
1
2
0
S
O
U
T
H
R
I
V
E
R
S
I
D
E
P
L
A
Z
A
,
S
U
I
T
E
1
2
0
0
C
H
I
C
A
G
O
,
I
L
6
0
6
0
6
3
1
2
-
8
7
6
-
6
9
2
7
3
1
2
-
8
7
6
-
7
3
1
8
f
a
x
VISIT OUR HOME PAGE
By: Robert E. McKenzie, Esq.
Code Sec. 62
Wages -- Reimbursed Employee Expenses; Accountable Plans -- Business Connection. Temporary
employment corp.'s per diem travel expense payments to non-local employees were wages subject to
withholding: payments weren't made under Reg § 1.62-2 accountable plan where per diem scheme based on
hours worked rather than reasonably expected travel expenses failed business connection test; and didn't
qualify as per diem allowance entitled to deemed substantiation treatment or Reg § 1.62-2(f)'s safe harbor
treatment. Also, payments, which admittedly weren't separately noted on paychecks in accord with Reg §
31.3401(b), qualified as wages under Code Sec. 3121, Code Sec. 3306, and Code Sec. 3401 where per diem
rate differed for each employee and payments substituted as compensation for services; and taxpayer's
alternative claim that it was mere conduit, not employer, was rejected. (Worldwide Labor Support of
Mississippi Inc. v. U.S., DC MS, 87 AFTR 2d 2001-2401 )
Reimbursed Employee Business Expenses -- Non-accountable Plans
Legal fees allegedly reimbursed under securities trader's settlement with former employer were treated as paid
under non-accountable plan and deductible only as miscellaneous itemized deductions, subject to AMTI
'add-back': although fees were clearly made in connection with business for Code Sec. 62 purposes, Reg §
1.62-2(e)(3)'s substantiation requirement wasn't met where taxpayer didn't corroborate statement that he
negotiated settlement in part on basis of his legal fees with time sheet or lawyer's bill; and employer testified
that unallocated settlement wasn't intended to be for any particular claim. (Andrew S. Brenner, et ux. v.
Commissioner, TC Memo 2001-127, TC Memo 2001-127 )
Acco