Office of the Inspector General
||September 1, 1998
||Heads of Department Components
Stephen R. Colgate
Assistant Attorney General
||Revised Policy Guidelines for Authorizing and Administering Extended Travel Assignments
Attached are policy guidelines for authorizing and administering extended travel assignments. Since my issuance of guidance on March 3, 1997, the Taxpayer Relief Act of 1997 was enacted, rendering as non-taxable, extended travel assignments of the Department's investigators, prosecutors, and support personnel. Extended assignments for other program or administrative purposes may still be taxable under the Internal Revenue Code. The attached guidelines address the issue of taxability of such assignments.
These guidelines were developed to assist components in interpreting and implementing the federal and Department of Justice Travel Regulations, and to achieve greater consistency within the Department in managing extended travel assignments.
If you have any questions concerning these policies, please call James E. Williams, Director, Finance Staff, on (202) 616-5800.
POLICY GUIDELINES FOR EXTENDED TRAVEL ASSIGNMENTS
September 1, 1998
Law and Regulations
The current statutory and regulatory requirements are as follows:
- When travel to a single location is expected to last for an
extended period, per diem should be reduced if the employee is able to obtain lodgings at a weekly or monthly rate that is less than the maximum allowable. [Federal Travel Regulation, 41 CFR § 301-7.12(b)]
- When travel to a single location is expected to be prolonged or indefinite, consideration should be given, to transferring the employee to the new location. [Supplement to Order DOJ 2200.11D, § 301-1.7]
- Generally, when travel to a single location is expected to exceed or actually exceeds one year, certain reimbursements constitute taxable income to the employee.
[26 U.S.C. §162 (a)]
- Travel which is certified as being for the purpose of investigation or prosecution of a federal crime is excepted from taxation under 26 U.S.C. § 162(a). The exception was enacted by The Taxpayer Relief Act of 1997, Pub. L. No.1 05-34, § 1204,
The following are the policy guidelines of the Department which apply to all components. In each instance of extended travel assignments in excess of 90 days, a Memorandum of Understanding (MOU) must be executed between the employee, the official authorizing the assignment, and an official at the temporary duty site in accordance with item #6 below.
- Extended Travel Defined: Extended travel is travel to a single-location which exceeds 30 days.
- Reduced per diem. When a travel assignment is expected to last more than 30 days and where it is possible to secure lodging and meals at less than the maximum allowable by travel regulations, total per diem, consisting of lodging plus the M&IE allowance, should be reduced to a level of no more than 75 percent of the maximum allowable for temporary duty travel.
For an assignment that will last more than 90 days, per diem must be so reduce. Normally, per diem will be reduced well below the 75 percent level. Absent extenuating circumstances, the 75 percent level is the ceiling. There is no minimum entitlement. The actual amount authorized should approximate the employee's actual expenses. At the discretion of the authorizing officer, full per diem may be allowed for the first 30 days of an assignment that will last more than 90 days, to afford the detailed employee the opportunity to obtain lower cost lodging and meals.
Exceptions authorizing in excess of 75 percent of the maximum per diem must be approved by the Component Head or the Component Head's Principal Deputy, or other official delegated such authority by either the Component Head or his or her Principal Deputy.
As an example, consider a detail to Washington, DC. The per diem for Washington, DC is $124 per night for lodging plus $38 per day for M&IE. The maximum allowable for 30 days is $4,860. Seventy-five percent of that amount is $3,645, consisting of $2,790 for lodging plus $855 for M&IE. The $3,645 establishes a ceiling.
| || ||Maximum|| ||75|
|Lodging|| ||$124 X 30 = $3,720|| ||$2,790|
|M&IE|| ||8 X 30 = 1,140|| ||855|
|Total|| ||$4,860 || ||$3,645|
Often, when lodging is secured on a monthly basis, the cost will be lower than 75 percent of the lodging allowance times 30 nights. For example, if an employee on an extended assignment in Washington obtains lodging for $1,700 per month, a total per diem of $2,555--53 percent of the maximum allowance--would be appropriate for a flat monthly rate. The actual rate to be allowed must be determined in each case, based on the expenses the detailed employee is anticipated to incur.
Other Expenses Considered. If the employee were to demonstrate the necessity to incur additional reasonable costs to maintain dual residences while on temporary duty, those additional costs may be considered in setting the lodging allowance. In this example, if an employee were to demonstrate an additional $100 in reasonable costs that are directly related to the temporary duty assignment, then the total allowance could be set at $2,655 as a flat monthly rate. That amount, approximately 55 percent of the maximum, would consist of the actual cost of lodging plus $100 for the additional costs relating to the primary residence and 7S percent of the M&IE allowance.
- Return Trips Home. There is no regulatory limit to the number of trips an employee may be required to make for official purposes. When an employee is on an extended travel assignment, return trips to the employee's place of abode may be authorized based on a determination that it is advantageous to the government. Such trips, paid for by the government, should not be authorized more frequently than twice per month, based on length of the assignment and other particulars of the individual assignment. Fewer trips may be authorized. More frequent return trips home require special approval by the Component Head or his or her Principal Deputy, or other official delegated such authority by either the Component Head or his or her Principal Deputy, unless it is cost effective to authorize more frequent trips.
A specific case-by-case cost analysis is not required to conclude that the costs of periodic weekend return travel (including the costs of potential overtime, if applicable) are outweighed by the savings in terms of per diem, increased employee efficiency and productivity, as well as reduced costs of recruitment and retention of employees.
- Effect of Leave and other Official Travel on Reimbursement.
When a detailed employee is on leave, or while away from the extended assignment on a return trip home, or away for official travel to a different temporary duty location, the reduced per diem will be further reduced by the daily M&IE allowance used to calculate the reduced per diem times the number of days the employee is away from the extended assignment location. When the employee is on official travel, per diem shall be paid for the location of that temporary duty. Only the M&IE portion of per diem paid at the extended assignment is not paid when the employee is away from the extended assignment location: all other expenses will continue to be paid in accordance with the extended travel authorization. If lodging for the extended travel assignment had been on an actual basis rather than part of reduced per diem, it too could not be paid when temporary duty travel away from that location is authorized.
- Relocation option. When it is known at the outset of an extended assignment, or when it becomes known that it will last for a year or more, the transfer option should be considered. A cost comparison need not be the sole basis for the transfer decision. Other factors, including but not limited to, personnel management, employee efficiency and productivity, short and long term program goals and strategies should be considered. After March 22, 1997, temporary relocations with limited reimbursements to employees may be authorized, in accordance with the Federal Employee Travel Reform Act of 1996 and implementing regulations to be issued by the General Services Administration.
- Taxability of Lodging and Meal Allowances. The following applies to extended travel assignments, except for travel assignments which have been certified as being in direct support of investigation and prosecution of civil and criminal matters. When extended assignments exceed one year or when it is reasonably expected that the assignment will exceed one year, reimbursements (or payments made by the agency on behalf of the employee) for lodging and M&IE will constitute taxable income to the employee. Reimbursements for lodging and M&IE will constitute taxable income to the employee from the point that the reasonable expectation arises that the extended assignment will exceed one year.
Even though the term of the assignment may be difficult to determine at the beginning, the MOU must state an expectation of the term of the assignment.
The taxable payments/reimbursements are subject to federal, state, and local income tax withholding, FICA withholding (as appropriate), and Medicare withholding.
To reduce the number of instances in which it is necessary to tax employees for their travel reimbursements, the Department's policy is that per diem payments will not extend beyond one year, unless approved by the Component Head or his or her Principal Deputy or other official delegated such authority by either the Component Head or his or her Principal Deputy.
- Exception to Taxation - Investigation and Prosecution.
The Taxpayer Relief Act of 1997: Pub. L. No. 105-34, § 1204,
excepts from the l-year limitation on travel deductions under § 162 (a) of the Internal Revenue Code, any federal employee during any period for which such employee is certified by the Attorney General (or designee thereof) as traveling on behalf of the United States in a temporary duty status to investigate, or provide support services for the investigation of a federal crime. The Internal Revenue Service has interpreted this provision to also include travel to prosecute a federal crime. Accordingly, any extended travel assignments which have been certified as such, are not taxable. The Attorney General has delegated to the Assistant Attorney General for Administration, the authority to certify employees as traveling on behalf of the United States to investigate, litigate, or prosecute federal crimes. This certification is only necessary when the travel would otherwise be taxable as described in paragraph 6.
- Receipts Not Required. When extended travel allowances have been authorized in accordance with these policies and have been documented through the required Memorandum of Understanding demonstrating the appropriate per diem reductions, the per diem rate payable on the payment voucher will be paid without receipts normally provided by the employee. (See 41 CFR § 301-7.12.)
- Memorandum of Understanding (MOU). In each instance of extended travel assignments in excess of 90 days, an MOU must be executed between the employee, the official authorizing the assignment, and a senior official at the temporary duty site, (so that allowances may be monitored for equity among all DOJ employees at that location), and must specify all elements of reimbursement and conditions affecting those elements, as follows:
- Dates. The MOU must state a beginning date and an expected ending date. The term of the MOU generally may not exceed one year; therefore, all MOUs must be renewed no less frequently than annually.
- Cost. MOUs must include the amount of per diem to be paid, demonstrating appropriate reduction and approvals in accordance with Department policy. The per diem authorized should always state separately, the lodging and the M&IE, even when the total per diem has been reduced in accordance with paragraph 2.
- Residence. The MOU must require the employee to certify whether or not he or she intends to maintain a personal abode in a real and substantial sense at the permanent duty station. The MOU must also require the employee to notify his or her supervisor if at some point during the assignment, the personal abode at the official duty station is no longer maintained, or has been changed in a substantial manner to reduce living expenses. The MOU must also require that the employee notify his or her supervisor of any change in the cost of lodging at the temporary duty location. Management should review such changes in expenses to determine whether any adjustment in the lodging allowance is necessary.
- Return Trips Home. The MOU must specify the frequency of return trips home that will be reimbursed by the Government, excluding trips required for official duty for purposes relating to the extended assignment or for other purposes.
- Taxability. The MOU must state whether or not any payments on behalf of, or reimbursements to, the employee are to be considered taxable income to the employee. Unless excepted under paragraph 6., MOUs for assignments expected to exceed one year must contain a specific provision that all per diem reimbursements are taxable income to the employee.