Are You A "Tax Turtle" If You Live In Your Truck?

Are you a "Tax Turtle" if you live in your truck and still claim travel-related expenses like per diem?

There are frequent posts on trucker social media forums and even in trucking publications that suggest merely having a post office box will be sufficient to meet the IRS’ regulations for claiming travel-related expenses. However, if you are an over-the-road truck driver who lives in the truck when you are "home" you may be a classified a "tax turtle".

• Self-employed truck drivers subject to DOT hours of service regulations are entitled to claim:
  • meals and incidental expenses, and
  • other travel-related expenses as a tax deduction[i].
• To claim travel expenses a trucker must have a tax home in a real and substantial sense.
• A trucker that fails to meet these criterion is considered a “tax turtle”, an itinerant or someone who has a home wherever he or she happens to be working[ii].
  • A "tax turtle" is not entitled to claim away-from-home travel expenses.

Sole-proprietorship trade or business expense deductions are the most litigated issue before the US Tax Court.

Taxpayer Advocate Service, "Most Litigated IRS Issues 2022"

Would John be classified a "tax turtle"?

• John was an OTR truck driver for the year under audit
• He was away from home for 358 days, and
• Exceeded having merely a PO Box - he claimed to live with his mother[iii]

Tax Court inquiry

Whether John had a tax home and whether his mother’s house was indeed his permanent residence were factual questions:

• He made only one visit to stay with his mother during the year in question, and
  • the visit lasted three days while he served jury duty.

• On the five other occasions on which John visited the Kansas City area, he slept in his truck that he parked in a casino parking lot.
• Additionally, John kept no belongings at his mother’s house; instead, he kept them in a rented storage locker.
• Most significantly, John bore no expenses in maintaining a home.
  • He paid no money for rent, utilities, or any other household expenses during the year under audit.

US Tax Court ruling

John was a “tax turtle” who was not entitled to claim per diem and travel-related expenses.As this case demonstrates the PO Box gambit will not survive scrutiny in a tax audit. For a self-employed truck who lives in their truck to claim travel-related expenses, like per diem, some amount of expenses must be incurred at your declared tax home. It would also be wise to spend some time there lest you risk being classified a “tax turtle”.

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Per Diem Plus was born over our 30 years of experience as agents and tax practitioners and a relentless pursuit to introduce efficiency to the time-consuming task of tax compliance for truck drivers, fleets and their accounting professionals. The Per Diem Plus^® Fleets enterprise platform enables motor carriers to easily implement an IRS-compliant fleet per diem program in hours that is scalable and data plan-friendly. Per Diem Plus was designed, developed and is managed in the USA and is the only IRS-compliant mobile application that provides automatic trucker per diem for solo and team drivers traveling in the United States and Canada. For more information, contact us at info@perdiemplus.com or visit www.perdiemplus.com

About the Author

Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.

In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA

Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.

Copyright 2023 Mark Sullivan Consulting, PLLC; Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®

[i] IRS Rev. Proc. 2011-47 (most recently superseded by 2017-42) & IRC 162(a)(2); Reg 1.162-2) A tax deduction is allowed for ordinary and necessary traveling expenses incurred by a taxpayer while away from home in the conduct of a trade or business. A truck driver is not away from home unless his or her duties require the individual to be away from the general area of his or her tax home for a period substantially longer than an ordinary workday and it is reasonable to need rest or sleep.

[ii] Rev. Ruling 75-432

[iii] HATEM ELSAYED, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 8935-07S. Filed May 26, 2009