Using the per diem allowance rule can help alleviate the recordkeeping for lodging, meals, and incidental expenses incurred by an employee while away from home overnight on business. It can be a useful tool when you have many employees traveling on business at once. However, are you aware of the Internal Revenue Service requirements for reporting billable per diems on customer invoices?
In order to make sure you are compliant with Internal Revenue Service rules, you will need to follow a few important items. First, the per diem expense reimbursement must be separately stated on each invoice. They cannot be blended into the employee’s pay rate being charged to the customer. Second, you should review your customer agreement to ensure it does not expressly identify the party that will be subject to the “normal” 50 percent business meal limitation.