Travel Expenses: Dumb Things your Company has Done
Jan 5, 2019, 1:09 am
#346
Join Date: Mar 2016
Posts: 1,884
I would never claim mileage on a rental and don't make a ton when I do use my car and get reimbursed because my vehicle requires premium, barely gets 25 mpg in the winter, my prior lead foot means my insurance is $110/month and German cars often have high early depreciation. So the reimbursement rate is not a profit center for me and thus I fly.
With that said, I think the majority of mileage is paid at the IRS rate as a guideline and not because it is being put on the 1040 as mileage. If I rented a car and claimed mileage instead, I'm not sure how my employer would react but I think they wouldn't care that much either way. For most of us, mileage is a pass through expense not put on anyone's 1040 as mileage. I'm a software architect and my company passes through my expenses to my clients who then expense it as a software purchase, vendor travel or even capitalize it. It never goes on anyone's 1040 as mileage. The amount paid is using the IRS amount as guidance not because they are required to.
The IRS amount is a guideline for most companies. If you are claiming it on your 1040 or your employer is, then the rule about it having to be your car applies. I just don't think that's the case for the majority of the people and barring an employer policy expressly prohibiting it, I don't think it would even be a CoC violation. And certainly the police would get a chuckle before they asked you to stop prank calling them.
With that said, I think the majority of mileage is paid at the IRS rate as a guideline and not because it is being put on the 1040 as mileage. If I rented a car and claimed mileage instead, I'm not sure how my employer would react but I think they wouldn't care that much either way. For most of us, mileage is a pass through expense not put on anyone's 1040 as mileage. I'm a software architect and my company passes through my expenses to my clients who then expense it as a software purchase, vendor travel or even capitalize it. It never goes on anyone's 1040 as mileage. The amount paid is using the IRS amount as guidance not because they are required to.
The IRS amount is a guideline for most companies. If you are claiming it on your 1040 or your employer is, then the rule about it having to be your car applies. I just don't think that's the case for the majority of the people and barring an employer policy expressly prohibiting it, I don't think it would even be a CoC violation. And certainly the police would get a chuckle before they asked you to stop prank calling them.
Edited to add: If you want to use Actual Expense reimbursement, you can rent a camel to get around, and claim the full cost for reimbursement as far as the IRS cares. It's only the Standard Mileage that cares about ownership.
Last edited by Qwkynuf; Jan 5, 2019 at 1:16 am
Jan 5, 2019, 1:30 am
#347
Join Date: Aug 2003
Location: MSN
Programs: Delta DM, Bonvoy LT Titanium, Hertz PC
Posts: 1,987
I think the point that you are missing here is that the standard mileage reimbursement is not taxable income on your pay stub. It doesn't show up on your 1040 (or your W2) precisely because it's not taxable. Your company could pay you $700/mile if they wanted to, but they would have to report it as income, and it would be subject to your marginal tax rate. If they show it as nontaxable mileage reimbursement, they *have* to follow the IRS rules - and those rules dictate that you are reimbursed mileage for your own vehicle - not a borrowed one, not a rented one, not an Uber, and not your girlfriend/boyfriend's car.
Edited to add: If you want to use Actual Expense reimbursement, you can rent a camel to get around, and claim the full cost for reimbursement as far as the IRS cares. It's only the Standard Mileage that cares about ownership.
Edited to add: If you want to use Actual Expense reimbursement, you can rent a camel to get around, and claim the full cost for reimbursement as far as the IRS cares. It's only the Standard Mileage that cares about ownership.
Jan 5, 2019, 8:00 am
#348
Suspended
Join Date: Nov 2015
Posts: 1,808
I would never claim mileage on a rental and don't make a ton when I do use my car and get reimbursed because my vehicle requires premium, barely gets 25 mpg in the winter, my prior lead foot means my insurance is $110/month and German cars often have high early depreciation. So the reimbursement rate is not a profit center for me and thus I fly.
With that said, I think the majority of mileage is paid at the IRS rate as a guideline and not because it is being put on the 1040 as mileage. If I rented a car and claimed mileage instead, I'm not sure how my employer would react but I think they wouldn't care that much either way. For most of us, mileage is a pass through expense not put on anyone's 1040 as mileage. I'm a software architect and my company passes through my expenses to my clients who then expense it as a software purchase, vendor travel or even capitalize it. It never goes on anyone's 1040 as mileage. The amount paid is using the IRS amount as guidance not because they are required to.
The IRS amount is a guideline for most companies. If you are claiming it on your 1040 or your employer is, then the rule about it having to be your car applies. I just don't think that's the case for the majority of the people and barring an employer policy expressly prohibiting it, I don't think it would even be a CoC violation. And certainly the police would get a chuckle before they asked you to stop prank calling them.
With that said, I think the majority of mileage is paid at the IRS rate as a guideline and not because it is being put on the 1040 as mileage. If I rented a car and claimed mileage instead, I'm not sure how my employer would react but I think they wouldn't care that much either way. For most of us, mileage is a pass through expense not put on anyone's 1040 as mileage. I'm a software architect and my company passes through my expenses to my clients who then expense it as a software purchase, vendor travel or even capitalize it. It never goes on anyone's 1040 as mileage. The amount paid is using the IRS amount as guidance not because they are required to.
The IRS amount is a guideline for most companies. If you are claiming it on your 1040 or your employer is, then the rule about it having to be your car applies. I just don't think that's the case for the majority of the people and barring an employer policy expressly prohibiting it, I don't think it would even be a CoC violation. And certainly the police would get a chuckle before they asked you to stop prank calling them.
Jan 5, 2019, 8:34 am
#349
Join Date: Aug 2003
Location: MSN
Programs: Delta DM, Bonvoy LT Titanium, Hertz PC
Posts: 1,987
As someone who investigates and prosecutes white collar crimes and who has worked thousands of expense cases, I can promise you that falsifying expense reports IS a prosecutable crime, that by the time it is caught it has gone on for years, has snowballed well into felony amounts, and that the police have no problem taking employees out in cuffs when notified about it. Among the many poor defenses for the behavior I hear, the top one is "Well, they didn't expressly say I couldn't do it!".
People continue to confuse this with how companies handle employee travel expenses. This thread is about expense report and if you are claiming the mileage on an expense report, you better as heck not be claiming the IRS mileage deduction. The rules for vehicle ownership don't apply to your employer reimbursing you because nobody is bound by the IRS rules since nobody is claiming the deduction. Unless your expense policy explicitly states it, it's not against the rules. Companies don't even have to reimburse at the IRS rate, they can go higher or lower. It's just a guideline unless you are deducting it on your taxes -- and if it's on your expense report you can't. https://www.timesheets.com/blog/2014...-mileage-rate/
Financial crimes have windows, in my state they are 90-180 days so your aggregation policy is out the door. Last year I had ~ $2200 in identity theft and they had an IP and I and the banks provided some leads. My mid-sized city refused to investigate because it wasn't over a $2500 threshold. They are never going to investigate someone who made $50 off expense reports in a 90 day window by claiming mileage instead of the rental charges. Never. Especially since it's not violating a law anyway, just a policy that I've never seen a corporation have.
This reminds me of the discussion people have about crappy things employers have done and then some braggadocio will come in and say "my employer did this despicable thing and I went to the labor board and got it fixed right up." Never mind that despicable thing was not against the law, employment is at will and a lot of us now live in right to work states. No labor board is going to get involved. But I've seen this basic premise on several threads in this forum.
Jan 5, 2019, 8:49 am
#350
FlyerTalk Evangelist
Join Date: Nov 2009
Location: Earth. Residency:HKG formerly:YYZ
Programs: CX, DL, Nexus/GE, APEC
Posts: 10,689
Just a thought:
What about a government worker driving a Tesla and getting $0.56(Canadian) per km as per policy and charging the batteries at the office overnight?
What about a government worker driving a Tesla and getting $0.56(Canadian) per km as per policy and charging the batteries at the office overnight?
Jan 5, 2019, 9:23 am
#351
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Join Date: Aug 2010
Location: DCA
Programs: UA US CO AA DL FL
Posts: 50,262
The world is full of people who will tell you that they have deducted X or Y for years or that they don't report A or B and that they have never been audited or otherwise assessed for the unpaid taxes. That may well even be true.
These things go wrong from the tax perspective when they go wrong from real world misfortunes, e.g. accidents, storm damage and whatever else can go wrong in life.
On the flip side of making a few bucks by collecting mileage on rental vehicles is the prospect that you are in an accident, the other guy is severely injured, it is your fault, and there is a $500,000 medical tab to be paid. Neither your insurance, nor your employer's nor any rental insurance will provide coverage and you are on the hook for the $500K which can be paid down over 20 years.
Doesn't happen often, but for people who game the system enough, they sooner or later step on something which goes "boom".
These things go wrong from the tax perspective when they go wrong from real world misfortunes, e.g. accidents, storm damage and whatever else can go wrong in life.
On the flip side of making a few bucks by collecting mileage on rental vehicles is the prospect that you are in an accident, the other guy is severely injured, it is your fault, and there is a $500,000 medical tab to be paid. Neither your insurance, nor your employer's nor any rental insurance will provide coverage and you are on the hook for the $500K which can be paid down over 20 years.
Doesn't happen often, but for people who game the system enough, they sooner or later step on something which goes "boom".
Jan 5, 2019, 11:05 am
#352
Join Date: Aug 2003
Location: MSN
Programs: Delta DM, Bonvoy LT Titanium, Hertz PC
Posts: 1,987
The world is full of people who will tell you that they have deducted X or Y for years or that they don't report A or B and that they have never been audited or otherwise assessed for the unpaid taxes. That may well even be true.
These things go wrong from the tax perspective when they go wrong from real world misfortunes, e.g. accidents, storm damage and whatever else can go wrong in life.
On the flip side of making a few bucks by collecting mileage on rental vehicles is the prospect that you are in an accident, the other guy is severely injured, it is your fault, and there is a $500,000 medical tab to be paid. Neither your insurance, nor your employer's nor any rental insurance will provide coverage and you are on the hook for the $500K which can be paid down over 20 years.
Doesn't happen often, but for people who game the system enough, they sooner or later step on something which goes "boom".
These things go wrong from the tax perspective when they go wrong from real world misfortunes, e.g. accidents, storm damage and whatever else can go wrong in life.
On the flip side of making a few bucks by collecting mileage on rental vehicles is the prospect that you are in an accident, the other guy is severely injured, it is your fault, and there is a $500,000 medical tab to be paid. Neither your insurance, nor your employer's nor any rental insurance will provide coverage and you are on the hook for the $500K which can be paid down over 20 years.
Doesn't happen often, but for people who game the system enough, they sooner or later step on something which goes "boom".
As a former claims adjuster for Progressive (they put me in IT training program after a few years when Y2K caused a massive shortage of COBOL coders), I can tell you the business exclusion on your personal policy is narrow. If you are driving to a business meeting, a client, or other similar A to B travels, that’s fine. It’s like driving to work. If you are delivering something, carrying people or property for a fare and other things where the act of driving is your work, then it’s wxcluded. There are certainly instances where this applies but if you rent a car to work at a client and claim miles, not only will your auto policy, your CC and the car rentals policy likely cover you, you are also not going to go to jail if you claim it based upon a mileage rate from your employer.
Jan 5, 2019, 12:30 pm
#353
FlyerTalk Evangelist
Join Date: Apr 2001
Location: MEL CHC
Posts: 21,026
Thread title is "Travel Expenses: Dumb Things your Company has Done"
Some posts are going way off topic with discussion about tax, IRS, insurance, liability and the like. Those are for another thread.
Some posts are going way off topic with discussion about tax, IRS, insurance, liability and the like. Those are for another thread.
Jan 5, 2019, 12:48 pm
#354
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Join Date: Jun 2013
Location: Ontario, Canada
Programs: Aeroplan, IHG, Enterprise, Avios, Nexus
Posts: 8,355
Two employees sharing a taxi. They receive the receipt from the taxi driver. Both employees claim a reimbursement for one receipt through their travel app -> OCR software of the travel software detects it and notifies the assigned manager. Both employees were fired on the spot.
Jan 6, 2019, 6:04 pm
#355
FlyerTalk Evangelist
Join Date: Jun 2005
Posts: 38,410
Agreed. Although I know of some friends whose companies make them go get rental cars for long trips. That doesn't work for me at all because it's easily an extra hour each way to pick up / drop off / fill up, shuttle, park, paperwork, etc. What a waste of up to 25% of your work day for a vry nominal savings by the employer.
Jan 6, 2019, 6:13 pm
#356
FlyerTalk Evangelist
Join Date: Jun 2005
Posts: 38,410
Adding on to this, the tax code around mileage reimbursement indicates that the standard mileage rate is intended to be a catch-all, covering all expenses associated with "owning" and operating your personal vehicle for business purposes - much in the same way that you have a choice between itemizing your deductions or taking the "standard deduction". One of the factors in the reimbursement is depreciation of the vehicle. Since you don't own the vehicle, you can't depreciate it. In the case of a rental, the owner of the vehicle (Hertz/Avis/whoever) is already deducting the depreciation. It is also true that you can't take standard mileage for a borrowed car for the same reason. You can, however, deduct the actual cost of the rental.
I am sure that many will say "Well, *MY* company allows it!", but the answer is probably not. If they are reimbursing you at IRS rates, then they are most likely deducting that on *THEIR* taxes, so they are subject to the same rules. If they are paying more than the standard mileage rate, then they would have to report the excess as taxable income.
I am sure that many will say "Well, *MY* company allows it!", but the answer is probably not. If they are reimbursing you at IRS rates, then they are most likely deducting that on *THEIR* taxes, so they are subject to the same rules. If they are paying more than the standard mileage rate, then they would have to report the excess as taxable income.
Jan 6, 2019, 10:58 pm
#357
Join Date: May 2015
Location: South Florida
Programs: DL Skymiles KE Skypass
Posts: 2,363
OK, I had a Regional Manager who was smart enough to do something out of the ordinary that saved our company money.
I was sent to another city to help train an office that was totally gutted due to the entire management staff resigning at once. The Regional Manager had hired a new staff and I was brought in to work with the new Operations Manager while he worked with the Branch Manager to bring them up to speed. He decided he needed me for another week as the Ops Manager was going to do her first payroll and I would oversee it as well as get their files in order. I was to fly home Friday evening and he was having me fly back Sunday evening and stay until the following Friday afternoon.
I was going to be put up at the same hotel where I was staying. When I went to inquire about making a new reservation, Sunday to Thursday nights (5), the rate was going to be a daily rate, but if I "stayed" and paid the weekly rate, I would save the company 50% of paying the daily rate. When I approached him about the savings, he had me make the reservation for the week (Friday through Thursday) even though I would not be there Friday and Saturday. I was able to keep my same room, and left my non-essentials in the room so I would not have to worry about bringing them back and forth with me.
This is the type of manager who can think outside the box to save money for the company.
I was sent to another city to help train an office that was totally gutted due to the entire management staff resigning at once. The Regional Manager had hired a new staff and I was brought in to work with the new Operations Manager while he worked with the Branch Manager to bring them up to speed. He decided he needed me for another week as the Ops Manager was going to do her first payroll and I would oversee it as well as get their files in order. I was to fly home Friday evening and he was having me fly back Sunday evening and stay until the following Friday afternoon.
I was going to be put up at the same hotel where I was staying. When I went to inquire about making a new reservation, Sunday to Thursday nights (5), the rate was going to be a daily rate, but if I "stayed" and paid the weekly rate, I would save the company 50% of paying the daily rate. When I approached him about the savings, he had me make the reservation for the week (Friday through Thursday) even though I would not be there Friday and Saturday. I was able to keep my same room, and left my non-essentials in the room so I would not have to worry about bringing them back and forth with me.
This is the type of manager who can think outside the box to save money for the company.
Jan 6, 2019, 11:00 pm
#358
Suspended
Join Date: Nov 2015
Posts: 1,808
I wouldn't be that quick on the trigger unless I were looking for an excuse to fire a specific employee. I have caught direct reports fudging their expense claims and took a less draconian approach. The cost to the company of replacing them plus the disruption in operations were not worth it over what amounted to pocket change. They were disciplined, reparations made and every expense report they submitted afterwards was perfect to the last cent.
In a cumulative sense, over years, this can add up to significant amounts. And once they get away with an inch, they will more than likely try a few more yards, and perhaps a mile. Integrity matters.
Jan 7, 2019, 7:41 am
#359
Join Date: Aug 2012
Location: NYC
Programs: Delta Gold, Marriott Platinum, Former Amtrak Select, Former Hilton Gold
Posts: 422
A buddy of mine books rental cars on his own, but submits reimbursements for mileage on a personal car. For most of his trips, this ends up earning him some additional money, as the rentals + gas tend to be cheaper than the mileage reimbursements for longer roadtrips, and saves wear/tear on his car.
Would you consider it fraud if the employee was driving a car they got as a gift?
I could see this being considered fraudulent (or a violation of policy) if they're doing this when renting a car after flying somewhere but not if driving is the primary mode of travel for the trip.
Edit: Oops, I see this conversation already went to another page. Didn't mean to re-start it
Last edited by lost_perspicacity; Jan 7, 2019 at 8:05 am
Jan 7, 2019, 8:13 am
#360
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Join Date: Aug 2010
Location: DCA
Programs: UA US CO AA DL FL
Posts: 50,262
The thing is, if you have caught them engaging in this behavior, they are of the mind of this behavior. You may just be seeing the tip of the iceberg. When one starts to exploit the company for personal gain and rationalizes that behavior, they have a mentality that is a liability. Everyone is replacable, and the idea that they are too good to let go or that it would cause trouble to extricate a person of a fraudlent mindest is kind of a "sunk-cost" fallacy.
In a cumulative sense, over years, this can add up to significant amounts. And once they get away with an inch, they will more than likely try a few more yards, and perhaps a mile. Integrity matters.
In a cumulative sense, over years, this can add up to significant amounts. And once they get away with an inch, they will more than likely try a few more yards, and perhaps a mile. Integrity matters.
Smart companies give their managers a lot of discretion.