*1 LABOR SUPPORT WORLDWIDE MISSISSIPPI, INC., Plaintiff-
OF Defendant-Appellant, Counter
v. America, STATES UNITED Claimant- Defendant-Counter Appellee. No. 01-60535. Appeals, States Court United Fifth Circuit. 15, 2002. Nov.
713 tory additions. The district court held hourly per diem travel reimbursements made Worldwide to its non-local employees were wages. taxable vacate summary judgment We and remand for further proceedings.
I provides temporary
Worldwide skilled labor to industrial and commercial busi- nesses, including Caterpillar, Inc. Facing difficulties, labor Caterpillar from July through 1994 December 1995 leased work- from ers Worldwide.
Many of the workers remained at the Aurora, Caterpillar job site in sev- Illinois days en a week. hourly addition to an wage, paid an additional employees amount hour to who lived more than Caterpillar 100 miles from the D. Slyke, (argued), Leonard Van Jr. meals, as lodging, site reimbursement for Basham, Woodliff, Heidelberg Lori Nail & and incidental While non-local Thomas, Philip William Bracy John Beard employees fifty-cent received two increas- Baker, Donelson, (argued), Bearman & es in their per diem after each of Caldwell, Jackson, MS, for Worldwide La- job, their first two months on the local . Support Mississippi, bor of Inc. employees whom paid no diem was fifty-cent instead received raises their Robert Branman (argued), J. Bruce Ra- paid salaries. The to non-local Ellisen, Justice, leigh Dept, U.S. of Tax computed regular on both Div., DC, Washington, for U.S. result, hours and overtime As a hours. away were who from home for the same amount of time received different because some worked more than employment, others. No KING, Judge, Before Chief unemployment, paid or income tax was on HIGGINBOTHAM and EMILIO M. the amounts of these reimbursements. GARZA, Judges. Circuit government audited feder- HIGGINBOTHAM, E. PATRICK Worldwide, al tax returns of Judge: Circuit determining required that Worldwide was Support Mississip- Worldwide Labor of tax pay amounts of the Inc. pi, appeals grant assessing the district court’s employ- additional $4,798.21, summary judgment in ment paid taxes. Worldwide $2,019,888.77 employ- amount assessed in each quarter one taxes, interest, ment accruals of and statu- and filed a claim for a refund travel can paid. amounts de- allowance for meet the the refund. if it requirement
nied business connection “computed on basis similar to used 2000, 2, March Worldwide filed On wages computing employee’s oth- requesting court claim in federal district *3 (e.g. er compensation the number $4,798.21. of the refund of worked, traveled, pieces pro- miles unpaid the of counterclaimed for balance duced)” long as “a diem per as allowance all the as to of Worldwide the assessments computed on that commonly basis was paid travel expense who were industry used in employee the which the quarters in the four of reimbursements 12,1989.6 employed” is on December granted gov- The district court the 1995. summary judgment motion for ernment’s requirement The substantiation judgment the awarding and entered final the governed by facts of this case is rules $2,991,925.76. Worldwide 94-77, promulgated Rev. Proc. which timely appealed. allow the reimbursement of travel ex- penses per under a diem in lieu of the II substantiation of each as would question The central here is whether the be required. provide otherwise The rules hourly per on paid monies an diem basis a per the amount of diem allowance non-local by Worldwide to its as deemed substantiated for each calendar expenses reimbursed travel count as day equal per “is of the lesser subject which are to “wages” employment day for such allowance or the amount com- subject These are not taxes. puted at the Federal rate for if the taxes are locality day.”7 of travel for such subject pur- to an “accountable plan” made 94-77, Proc. Under Rev. the returning 62(a)(2)(A) 62(c), §§ suant to 26 U.S.C. in excess of expenses require- amounts 1.62-2(c).1 § A as defined Treas. ment is satisfied under a diem ar- (1) when plan is “accountable” it covers rangement long as employees as are re- connection;2 a business expenses with quired to return allowances that “relate[ ] (2) all are substantiated to to days of travel not ... substantiated (3) employee employer;3 and is re- even though does not quired employer any to return to the require portion return paid amount excess of substantiated ex- of such an allowance that ... exceeds the If a not penses.4 plan does meet these employee’s expenses of criteria, it is considered “nonaccountable” deemed substantiated.”8 subject withholding employ- and is ment taxes.5 III regulations specify also how arrangements such as court reviews grant summary This of novo, requirements. judgment
can meet these
A
applying
de
the same stan-
2(h)(1).
2(d)(3)(ii)
added).
Reg. §
Treas.
(emphasis
§
1. See
6.
Id.
1.62 —
1.62 —
1.62-2(d).
2.
Id. at
94-77,
825, §
7. Rev. Proc.
1994-2 C.B.
4.01.
1.62-2(e).
3.
Id. at
7.02;
§
8.
Id.
see also id.
2.07.
1.62-2(i).
4.
Id. at
2(c)(3)(i) 1.62-2(c)(5).
§§
Id.
&
1.62 —
Trucks,
here,
appeal
court.9 The district
as
dard as the district
turned
Trucks,
“on the
question whether
Inc.
granted
government’s
motion for
court
reasonably anticipated and calculated the
summary judgment because it concluded
drivers’
reimbursing
before
paid
that the
diem amounts
court,
Reversing
them.”12
the district
were not made with the reason-
Worldwide
Eleventh Circuit concluded that “the focus
that the
would
expectation
able
business connection test
actually
incur
travel
in the
employer’s
expectations,
reasonable
diem.
paid
amounts
as
actual expenditures.
drivers’
These
argues
genuine
that there is
questions
reliability
and state of mind
issue of material fact as to whether its
purview
jury.”13
fall within the
Ap-
calculated not to exceed
*4
plying
analysis
to
trucking compa-
the
expenses
by
the amount of
incurred
its
case,
ny at
in that
issue
the Trucks court
employees.
government argues,
As the
held that “[t]he reasonableness of
both
arrangement,
under Worldwide’s
Trucks’s
anticipations
calculations and
ais
have
expected
who should
been
jury question
appropriate
and not
for sum-
incur
expenses
to
similar travel
received
mary judgment
pro-
because Trucks has
dramatically different reimbursements be-
duced some evidence
that its
met the
cause
worked more hours in the same
requirements
IRS
at the time.”14
days.
particularly
number of
Employees,
overtime,
those who worked
would inevita-
reasoning persuasive.
We find this
We
bly
in
receive reimbursements
excess of
conclude that
employer
whether the
rea-
reasonably anticipated expenses
their
un-
sonably anticipated and calculated its em-
der
scheme.
ployees’
travel
in the
course
developing its
arrange-
Worldwide relies on the Eleventh
essentially
ment is
one of state of mind
Trucks,
Circuit’s
v.
decision
Inc. United
that,
long
employer produces
and
so
as the
Trucks,
trucking company
States.10 In
summary judgment evidence that amounts
reimbursed
for
on a per
truckers
“ ‘conclusory allegations,
to more than
im-
revenue,”
diem rate based on the “load
inferences,
probable
unsupported
and
“primarily by
which was calculated
the
”
speculation,’
the issues of reasonableness
driven,
of miles
number
but is modified to
proper questions
and state of mind are
for
weather, unloading
account for
and reload
jury
the
and should not be decided on
and
ing,
particular’
road conditions
summary judgment.15
11
area.”
Because the truck drivers were
required
receipts
not
to turn in
and re
It is of no moment that Trucks and
per
they slept
ceived the
diem even if
in the
parties apply
other cases cited
their trucks instead of
for
paying
lodging,
ing
Treas.
1.62-2 all involve the
greatly
transportation
reimbursement amounts could
ex
industry, particularly truck
messengers
ceed
drivers and
and couriers.
Corp.,
9.
v. DSC Communications
Id. at
1344.
Holtzclaw
254,
(5th Cir.2001).
255 F.3d
257
Inc.,
Shortstop,
Rally’s,
15. Int’l
Inc. v.
939
(11th Cir.2000).
10.
Section 1.62-2 weekly per aggregated cir- diem rate qualify, diem to certain over plans cumstances, plans accountable without .76%.16 as same number of weeks involved, industry de- limitation as As the and the point dissent argu- claim at oral spite government’s out, the problem argu- with Worldwide’s provisions 1.62-2’s are ment that section weekly ment is that federal truck driv- application intended guide rate is a reasonable because Moreover, ers, messengers. pilots, Worldwide’s own research that the showed in this there case that it was dispute is no employees would incur likely industry custom —the lodging and meals at local establish- industry labor De- temporary skilled —on ments significantly pro- less than that 12, use hourly per 1989 to cember weekly vided for by the federal arrangements. travel reimbursement rate for locality. Specifically, gow Trucks, reasoning of we
Applying eminent argues lodging federal produced consid- observe that Worldwide locality day for the $40 summary judgment of re- evidence erable expenses per meals and incidental search it undertook determine its per day, diem is but Worldwide’s re- *5 $26 particular, pro- diem Worldwide rates. (according search showed to an informa- president its in testimony vided his hires) provided tion sheet it to new that its deposition, investiga- which describes the employees could find motel for rooms setting tion undertook before Worldwide per night with up to to $21.00 $32.50 $26 the jury ques- its leave to the rates. We per day expenses. for meals and incidental tion reimburse- of whether Worldwide’s such, government As the argues that reasonably calculated not to ments were require- fails to meet the the expenses the amount of in- exceed ments of section 1.62-2 based on World- employees. curred wide’s own research.
However,
government argues
the
persuaded,
We are not
that
that,
had
expecta
judgment
if Worldwide
the
of law
even
as a matter
was appropri-
tion
were
to
ate. A
that
jury
that its
calculated
could find
Worldwide
expenses,
expec
meet
not exceed
this
reasonably
anticipated
and
each
$48,
generally
$52,
tation was not reasonable as a matter of would
receive either
or
essentially
law. This is
what the district
in
day
travel reimbursements for
$56
found,
argument
working
court
the
urged by
eight-hour day.17
and is
an
only
This is
slightly
It is the central
than
per day
dissent.
issue
this
more
that
$47
attempts
case.
to
answer
Worldwide’s research showed that
one
argument
to a
by pointing
compilation
required
its employees
spend
would be
to
expensive
travel
rec
if he
stayed
the least
hotel in
summary judgment
room,
ords in the
evidence
a double-occupancy
is
less
slightly
7.3%
demonstrating
weekly
day
of its
than the
travel
$58.50
exceeded
reimbursements
federal Worldwide’s research showed its employee
and, in
weekly per
aggregate
stayed
diem rate
would incur if he
at the
expen-
most
for
year,
hourly per
room,
its 1995
diem sive
in a single-occupancy
hotel
seven-day
upon
$462
rate
based
eight-hour
This
is
on a
17. These
are based
an
rates
$6.00, $6.50,
week,
day
hourly per
$7.00
at a
corresponds
daily
to a $66
so it
rate.
diem rate.
per day employees
less than the
did not. This is not the case.
considerably
is
$66
em-
government reimburses its
flight
eight
the federal
A
attendant who works
working away from home
ployees
day pays
price
the same
hotel room
Thus
on the sum-
locality.
same
based
flight
as a
attendant who works for ten
upon by
mary judgment evidence relied
in-
hours.
Insofar as some
are
government,
jury
could find
daily-as opposed
hourly-
curred on a
to
payments are
Worldwide’s reimbursement
basis,
hourly per
diem
will
reasonably calculated not
to exceed
perfectly correspond
with these ex-
employees’ anticipated ex-
amount of its
penses.
regulations
that the
permit
Given
Moreover, the extent
to which
penses.
arrangements,
ques-
expectation was not reason-
tion cannot be
the per-
whether
knew or should
able because Worldwide
fectly corresponds
in-
many
have known that some or even
of its
curred but rather whether it is
employees would work overtime
non-local
calculated to reimburse
a fact
as to reason-
quintessentially
issue
their
We believe that there is
jury
and state of mind for the
ableness
enough summary judgment evidence here
based on its assessment of the wit-
decide
permit
jury
to determine that ques-
testimony
presented
and evidence
ness
tion.
it.
urge
and the
upon by
dissent
The case relied
daily per
that a
would
dissent,
better
the Ninth
Circuit’s deci-
requirements
meet
of Treas.
Delivery,
in Shotgun
sion
Inc. v. United
1.62-2,
an hourly per
as would
States,19
distinguished
can be
from the
*6
on overtime
which did
reimburse based
Shotgun,
case
In
a messenger
before us.
us,
question
hours worked. The
before
employed
and courier service
drivers who
is not what
pick-ups
used their own vehicles to make
conformity of the
might have used but the
Shotgun
and deliveries.
billed its custom-
Any hourly per
it did use.
primarily
mileage
ers based
on the
from
arrangement
logical
will not bear a strict
location,
delivery
pick-up
to the
which
that are
anticipated expenses
relation to
the actual driv-
necessarily
did not
reflect
daily
hourly
incurred on a
and not
basis.
often “dou-
ing distance because drivers
government’s
regulations
Yet the
own
more than one custom-
up,” carrying
bled
§ 1.62-2
Proc. 94-
Reg.
Treas.
and Rev.
Shotgun
package
er’s
time.20
also
allow for
explicitly
time,
waiting
rush
charged surcharges
arrangements
qualify as accountable
delivery,
weight,
and excessive
further
plans
argu-
under section 1.62-2.18 This
weakening any
relationship
direct
between
past
govern-
ment seems to whistle
in mak-
delivery charges and miles driven
regulations.
ment’s own
ing the deliveries.21
disputes
point, arguing
The dissent
Shotgun paid its drivers
commission
truck drivers
flight
attendants and
basis,
delivery
amounting to 40% of the
incur
that are
proportional
worked,
jobs they completed, but
charges for the
number of hours
but Worldwide
See,
1.62-2(d)(3)(ii);
e.g.,
Reg. §
Id. at
Treas.
970.
20.
18.
94-77,
see also Rev. Proc.
1994-
19.
issued government argues alterna deliveries on that drivers’ receivables tively portion that a paid wage the amount via the check. less arrangement to meet the fails words, together the two checks other requirements deemed substantiated delivery to 40% of the always amounted Be Rev. Proc. 94-77 for another reason: charges attributable to that driver.22 computed cause Worldwide Shotgun employment not deduct taxes did worked, on the basis of hours pay employ- checks or mileage from the 4.02(5) of Proc. 94-77 under section Rev. because it ment taxes these amounts only” diem is treated as a “meals argued its reimbursement per diem allowance and can be deemed plan under was an accountable section to the amount of the up substantiated 1.62-2. rate, IE Federal M & which was $26 Trucks, distinguished The Ninth Circuit Aurora, Thus, day during 1995 Illinois. “Trucks, Inc. allotted a uni- noting that that, if government argues even on each load to reim- form 6% of revenues plan were to survive the other expenses, per- burse whereas the driver tests, only day could be deemed $26 centage Shotgun paid as reimbursement in satisfaction of Treas. substantiated fluctuated, going its 40% commission with 1.62-2(e) for which Worldwide (paid at the minimum wages first to cover would not owe taxes. World law), and then to variable allowed responds that the mis wide (i.e. possible) paid remainder as much as reads section 4.02 of Rev. Proc. 94V77be The court as reimbursement.”23 conclud- *7 per reading require hourly cause it to all suggests ed that “the evidence that limited to “meals arrangements diem to be plan’s primary purpose was to treat industry only” would render the custom possible of the drivers’ 40% least 3.03(2) exception section of Rev. Proc. wages.”24 commission as taxable hourly plans diem per 94-77 for void. We Trucks, the instant case is distin- Like government. with the agree guishable Shotgun. Although from there First, not contend does among per were diem reim- variations that did not bursements received individual World- plan simply as an accountable be- qualify any given day wide on of non- employees’ of the reimburse- work, cause some particularly local for those who overtime, under the ments exceeded those available arrange- worked it a ment federal rate. Nor could make such did not admit of such a wide variance system plainly given express provisions as condoned. In claim Shotgun’s 24. Id. Id. at 971. (citation omitted). 23. Id. at 972-73 plan diem can be deemed substantiat- § will 1.62-2.25 Worldwide Reg.
Treas. those amounts requirement taxes on ed to meet the substantiation owe rate, 1.62-2(e). but this will the federal specifi- which exceed Section 4.02 sections in favor of World- finding not undermine arrangements limits diem cally arrangement’s eligi- as to entire wide to that “computed are basis similar plan.26 bility as an accountable wages in computing employee’s used (e.g., the number of compensation or other Second, reading plain as a matter of traveled, worked, pieces miles 94-77, has the Proc. Rev. only per to a “meals diem al- produced)” Reg. Treas. argument. of this better 2(c) only per A meals diem allow- lowance.” con- requires § the business 1.62— test,27 M IE rate require- capped ance is at the Federal & nection substantiation ment,28 in excess of by and return of amounts section 4.02. plan met for a requirement29 be is doing, procedure, In so the revenue hourly per § An qualify 162-2. contrary any express provision of or not satisfy business connec- diem can plan § Reg. 1.62-2.32 under Treas. allowance 12, 1989, if, on “only tion test December require- imposes Section 1.62-2 several computed on that ... a diem allowance plans to be ments for commonly industry in the used basis status, plan includ- eligible for accountable employed.”30 in' which the is test which can ing the business connection authority pre- has The Commissioner industry custom excep- be satisfied to what extent scribe rules to determine 2(d)(3)(ii). section But tion under 1.62— hourly plan satisfies substan- § to the Commissioner how 1.62-2 leaves require- return of excess tiation and may excepted from the usual plans such be ments.31 returning amounts substantiation power, the Commis- exercising In this expenses requirements. excess of Rev. Proc. 94-77. promulgated sioner 3.03(2) provides that a which 3.03(2)
Section simply incorporates the Section on a basis such as hours computed Reg. requirement of Treas. additional un- not a diem allowance” “per worked is 2(d)(3)(ii) prongs § for all three 1.62 — industry excep- custom less it meets the it to hour applies accountable test as above, already a tion. As stated this is 3.03(2)(b) That section ly per plans-. under Treas. 1.62- requirement industry excep custom also includes 2(d)(3)(ii) the busi- for such a to meet requirement does tion to meet connection test. ness excludes the that section 3.03(2)(b) mean 4.02(5) meals limitation of section addition, 4 of Proc. 94- Section Rev. plan that meets any from specifically provides then more *8 exception. That ex- industry under a the custom under which reimbursements rules 2(d)(3)(B). 1.62—2(c)(1), 1.62-2(d)(2), Reg. § Reg. §§ 62 30. Treas. 25. See Treas. 1.62 — 1. (i ). —2 1.62-2(f)(2). 1.62-2(e)(2), Reg. §§ 31. Treas. 1.62-2(h)(2)(i)(B); § Proc. 94- 26. See id. Rev. 825, 77, § C.B. 8.01. 1994-2 321, Ltd., Group 9 F.3d 32. See Clark v. Modern (3d Cir.1993) (“Treasury regulations take 1.62-2(d). Reg. § 27. Treas. contrary procedures precedence revenue over 1.62-2(e). Reg. § 28. Treas. primarily are intended as because the latter cases). guide taxpayers.”) (citing to 1.62-2(f). Reg. § 29. Treas. regulation, just as have dis- governing used to meet a threshold we may be ception 3.03(2), cussed, non-binding section not as a and so is not rendered requirement obtaining plan to accountable of pass by free under the facts of this case virtue hourly per plan does short, when status 1.62-2. In must section Worldwide of provisions meet not otherwise accept Rev. Proc. 94-77 and its limitations 1.62-2(e) 1.62—2(f) req §§ u and Reg. Treas. entirety in altogether quest in its or fail returning and iring substantiation tax-exempt for status for its travel of expenses, in excess of both amounts payments. reimbursement admittedly which government urges that we remand Indeed, reading not do. did of to the district court for consideration 4.02(5) section of Rev. Proc. would render portion what of Worldwide’s void, because the substantiation and 94-77 1.62-2(e) § Reg. under Treas. qualified amounts in of returning excess 94-77, presumably Rev. Proc. and sum- play do not into requirements even come mary judgment, along with two additional any hourly per plan that does not against certain of charges portions World- requirement meet the threshold first conclude, however, payments. wide’s We 2(d)(3)(ii) § Reg. and section Treas. 1.62 — these are consideration of matters 3.03(2) Rev. Proc. 94-77.33 to proper for district court address sum, if an can they may pretrial, to extent be re- requirements Reg. meet of Treas. law, by jury as a matter of solved 1.62-2(e) 2(f) §§ and resort without 1.62 — not, more, trial. We will without excepting provisions of Rev. Proc. 94- remand with instructions that these issues 77, qualify can as an accountable hypothetical be addressed on a motion for reimbursing lodging while as well as summary judgment. expenses. and incidental meals Com missioner, by promulgating Rev. Proc. 94- V 77, not contradicted Treas. has by limiting exceptions 1.62-2 to the grant We vacate the district court’s returning substantiation and usual summary judgment to the of expenses require amounts excess for further proceedings remand consistent permitted ments therein —which he is opinion.34 this with plans rule —to provide cover VACATED AND REMANDED. ing meals and incidental alternative, argues, GARZA, M. Judge, EMILIO Circuit 4.02(5) that section of Rev. Proc. 94-77 is dissenting: binding reject not on this court. We requires This case First, us determine argument grounds. on two World- purported whether satisfy wide could the substantiation returning Sup- made Worldwide Labor amounts excess of ex- (‘Worldwide”) penses requirements provi- port tempo- without Services to its meals, Second, rary employees lodging sions of Rev. Proc. 94-77. and oth- contrary procedure wages revenue is not er incidental constituted *9 noting only hourly per 33. It is worth that the 34. With our decision to vacate the district judgment, diem described in Rev. Proc. 94-77 is a meals court's we need not address World- only per challenge penalty diem allowance. See Rev. Proc. 94- wide’s to the assessed 77, 825, 3.03(1). against § C.B. it. 1994-2
721
site,
gave its
two months at the
Worldwide
taxes must
employment
federal
for which
in-
imposition
fifty-cent
additional
employees
In order to avoid the
an
paid.
be
taxes,
crease,
hourly
Worldwide’s reim-
reimbursement
raising the
of
Thus,
as an “ac-
plan
qualify
must
work-
employees
bursement
rate to
two
$7.00.
require-
pursuant
to the
plan”
countable
Caterpillar
at
site could receive
ing
1.62-2(d)-(f).
As
of 26 C.F.R.
ments
different
reimbursement
substantially
clearly explains,
pro-
majority opinion
on the total number of
depending
amounts
meets
determining
plan
whether a
cess of
employee
during
hours each
worked
involving
complex,
requirements is
these
week,
time
as well as the amount of
purposes
For
inquiries.
distinct
several
result,
had
on the site. As a
World-
been
issue is
the critical
appeal,
this
many employees for
wide reimbursed
reasonably
plan
whether Worldwide’s
was
than their own research
greater
amounts
amount of
not to exceed the
calculated
the maximum amount of an-
indicated was
actually
expenses
expenses
anticipated
or
employee
each
would
ticipated expenses
majority
by
employees.
incurred
fact,
jury
this
no rational
incur. Given
concludes that Worldwide has es-
opinion
rea-
plan
could find that Worldwide’s
was
of material fact
genuine
issue
tablished
sonably calculated not to reimburse its
was
cal-
as to whether its
amounts in excess of actual
employees for
anticipated
actual
culated to reimburse
or
anticipated expenses.
majority
In contrast
expenses.
presented any
has not
Worldwide
evi-
I
has failed
opinion, believe Worldwide
disparities
that these
reflected dif-
dence
showing because their reim-
make such a
expenses
in
of its em-
ferences
the actual
logical rela-
bursement scheme bears no
Instead,
site.
ployees
Caterpillar
tionship
anticipated
to the actual or
ex-
in-
suggests
the evidence
employees.1
penses Worldwide’s
expenses
and meal
lodging
curred similar
calculating reim-
method of
Worldwide’s
the number of hours worked.
regardless of
differing
bursement
resulted
employees paid
lodging
compensation
amounts of
Thus,
employee
hour.
an
night, not
site and
working
who were
same
week,
forty
worked
but
who
likely incurring
similar
World-
would incur
stayed
nights,
in a hotel for six
for the Cater-
wide’s
an
who worked
employee
costs as
identical
initially compensated temporary
site
pillar
week,
stayed
but
sixty hours that
miles
living more than 100
such, I do
nights.
six
As
same hotel for
worked for
plant
from the
hour
$6.00
trier of fact
any
believe that
rational
meals,
incidental ex-
lodging and other
found that Worldwide’s
could have
determining
In
the reimburse-
penses.
to exceed
reasonably calculated not
employee,
ment amount for each
World-
employees.
of its
the actual
regular
both
and overtime
wide included
indi-
employment records
addition,
who
hours.
actual amounts Worldwide
cate that
Caterpillar
at the
site for more
worked
exceeded
frequently
reimbursed
fifty-cent
in-
than one month received
anticipated
After
crease
reimbursements.
government's
though
proof as to whether the
important
den of
It is
to note that even
erroneous, as well as the
summary
assessment was
judgment
us on
tax
case comes to
govern
due from the
amount of the- refund
therefore the record must be viewed in
1329,
States,
non-movant,
F.2d
v. United
light
ment. Brown
most
favorable
Worldwide,
(5th
1989).
taxpayer,
bur-
Cir.
as a
still bears the
*10
would incur. Worldwide would
employee
each
be reimbursed for an amount within
employees
that its
would spend
anticipated expense
estimated
Worldwide’s
range, re-
per day
maximum of
or
gardless
employee
$58.50
of whether
that
was
$409.50
$6.50,
lodging.
$6.00,
Thus,
on meals and
paid
week
World-
or
hour.
$7.00
period
records for the
end-
payment
wide’s
jury
contend that a rational
could find
6, 1995,
paid
that
it
ing August
reveal
that
reasonably
Worldwide’s
was
cal-
workers more than the amount
sixty-six
culated to
employees’
reimburse its
antici-
suggested
research
was the maxi-
their
pated expenses.
majority opinion
expenses
weekly
employees.
mum
of their
jury
correct that a
could find that reim-
Thus,
in one
plan,
pay
under Worldwide’s
payments paid
bursement
employees
one-quarter of their
period, about
work-
any
who did not work
overtime hours fell
for
force was reimbursed
more than what within
anticipated expense
Worldwide’s
anticipated
maximum
was the
range. The problem
majority’s
with the
Moreover,
weekly expenses.
argument,
many
is that
of World-
employees
several of Worldwide’s
received
employees regularly
wide’s
worked over-
payments that far
reimbursement
exceed-
time, exceeding the maximum amount of
maximum
ed Worldwide’s
estimates of
lodging expenses
meals and
Worldwide an-
instance, Quentin
For
per week.
$409.50
ticipated
employees
its
would incur
aas
Lee received
reimbursements
$609.00
result. Because
during
August pay period
Danny
hours,
regularly worked overtime
the fact
Again,
received
given
McGhee
$563.50.
any
payments fell within Worldwide’s
evidence,
jury
no
reasonable
could anticipated expense range
merely
was
reasonably
find Worldwide’s
was
A
jury
coincidental.
rational
could not
compensate
calculated to
its
for
ignore these additional overtime reim-
expenses.2
their anticipated
bursement
in determining
majority opinion attempts
to coun- whether
reasonably
by pointing
ter this evidence
out that an
calculated to reimburse actual or anticipat-
employee working eight
Moreover,
per day
ed
jury
the rational
heavily
performance
Worldwide relies
on the fact that
with the
of services as an
percent
pay-
seven
of its reimbursement
employee
employer,
(2)
ments exceeded the federal
diem rate of
reasonably calculated not to exceed
concedes,
majority opinion
$66. As the
how-
the amount of the
or the antici-
ever,
reliance
Worldwide's
on the federal rate
pated expenses, and
availing
is not
because its own research indi-
(3) paid
applicable
at
Federal
anticipated expenses
cated that the
of its em-
rate,
schedule,
a flat rate or stated
ployees
be below
would
the federal rate for
any
or in accordance with
other Service-
94-77,
locality.
Revenue Procedure
specified rate or schedule.
"per
pro-
which defines
diem allowance”
§
regula-
Rev. Proc. 94-77
3.01. Under this
vides:
tion,
payment
the reimbursement
must be
reasonably calculated not to exceed actual
"per
or
The term
diem allowance” means a
anticipated expenses
paid
payment
and must be
at
or
other
federal
diem rate or at a flat rate or
allowance
stated
that meets
Thus,
1.62-2(c)(1)
schedule.
requirements specified
even if
Worldwide reim-
applicable
bursed its
and that is
federal
rate,
(1)paid
respect
because its
ordinary
with
research indicated that its
incurred,
necessary
employee’s
anticipated expenses
actual and
business
lower,
payor
significantly
reasonably anticipates
which the
were
would
incurred, by
will be
lodg-
not be
calculated to reimburse the
meal,
ing,
employees’ expenses
incidental
amount of its
or antici-
and/or
away
travel
pated expenses
regulations.
from home in connection
under the
*11
a
that the more hours
sonable to conclude
that Worldwide
the fact
ignore
could not
works,
employees
pilot
longer
for
or
the
flight
its
attendant
regularly reimbursed
home,
research indicated
away
than what its own
from
and the
they
more
will be
expenses
amount of
the maximum
they
in-
expenses
reimbursable
will
more
hours
it included overtime
week because
Thus,
is
lodging
cur for
and meals.
there
calculations.
those reimbursement
relationship between the number
logical
a
flight
a
or
attend-
pilot
of hours worked
that,
if it
majority opinion finds
The
incurred.3
expenses
ant and the amount of
argu-
accept
government’s
were to
ment,
per diem reimbursement
no
contrast,
not estab-
In
Worldwide has
as an account-
arrangement
qualify
could
the hours
any relationship between
lished
This
regulations.
able
and the
employees
expenses
worked
unacceptable,
reg-
since the
result seems
majority opinion
As the
they incurred.
arrange-
authorize such
explicitly
ulations
concedes,
plan resulted
em-
majority opinion,
The
ments.
away
were
from home for the
ployees who
government’s position.
misinterprets
receiving different
amount of time
same
as the
argue,
does not
The
payments.
Because Worldwide’s
contends,
hourly per
an
majority
that
for the
away
were
from home
exact-
reimbursement method must
time, regardless of whether
period
same
expenses.
for
ly
reimburse
ten,
a
eight,
or twelve hours
they worked
Instead,
merely contends
roughly
incurred
the same
day,
they
must be rea-
that such an
Never-
expenses.
of reimbursable
employ-
to reimburse
sonably calculated
theless,
reimburse-
they received different
anticipated
or
ex-
ees
for actual
Thus,
plan,
amounts.
ment
words,
In other
need
penses.
unlike the
employees for the
always
reimburse
attendants, was not reason-
pilots
flight
or
incurred,
it
they actually
but
expenses
ably calculated to reimburse Worldwide’s
way
in such a
so that
must be structured
incurred.
for
it will do
probability
is some
there
so.
because
preceding point is critical
The
opinion
heavily
relies
majority
contexts,
hourly per diem
In certain
an
Trucks,
Inc.
Eleventh Circuit’s decision
be
plan such as Worldwide’s could
reason-
(11th
States,
Cir.
calculated Shotgun’s plan, to Similar Worldwide’s employees preclude its to expenses of reimbursing employees method of bears summary judgment. little, if any, correlation to the actual ex- penses employees its incurred.4 More- scheme,
Worldwide’s reimbursement over, underlying Shotgun decision was from is distinct the one the court Shotgun attempting evidence that was in Trucks because dealt with Worldwide’s encourage types employee certain be- employees’ expenses did not increase with government. havior at the Rather, hour I each additional worked. essence, a Shotgun employee who made the Ninth Circuit’s decision in find Shot deliveries, thereby working faster fewer States, gun Delivery, Inc. v. United hours, greater receive a portion would (9th Cir.2001), persuasive F.3d 969 Here, his or her check tax free. World- Shotgun messenger instance. involved a wide’s workers have a similar incentive company whose drivers used their own work more overtime hours so as to receive pick-ups vehicles to make and deliveries. larger, tax-free reimbursements. Because Shotgun’s paid reimbursement scheme its anticipat- these amounts often exceed their forty percent drivers commission each ed daily expenses, employees delivery in two checks. The check first essentially they receive a tax-free bonus if compensated the drivers for the number of Thus, partic- work overtime. they paid worked. The amount method, ular reimbursement like the one hourly wages then was deducted from the in Shotgun, encourages employees its forty percent commission and the remain engage compa- conduct beneficial to the der included in a was second check which ny. purported mileage expenses. to cover As plan, a result of this presented, lesser number of Given the evidence no ration- hours each worked to al jury make his could find that Worldwide’s or her deliveries resulted in a greater calculated to reimburse- Moreover, opinion majority Shotgun employees. paid 4. The asserts that ed distinguishable from this case because World- in excess several of one hundred wide's "did not admit of such a dollars week over the sum calculated Shotgun's system plainly weekly wide variance as to be the maximum amount of ex- Yet, facts, penses. condoned.” Worldwide's it Given these seems difficult to records establish that re- some believe that Worldwide's did not con- ceived more than double the amount of reim- done as wide a variance in similarly Shotgun. bursement of other situat- as the one at issue in for their actual or an- ment Thus, I believe
ticipated correctly court found World- district qualify did not wide’s reimbursement regula- under the plan” as “accountable reasons, I foregoing For the would tions. judgment of the district AFFIRM the *13 court. America,
UNITED STATES Plaintiff-Appellee,
v. Leroy BAYMON, Jr., Defendant-
Appellant. No. 01-60879. Appeals, United States Court of Fifth Circuit. 15, Nov. Starrett,
Richard Terrell Asst. U.S. Jackson, MS, Plaintiff-Appellee. Atty., Warren, III, Carroll, James L. Warren Parker, Jackson, MS, for & Defendant Appellant. HIGGINBOTHAM, DUHÉ and
Before DeMOSS, Judges. Circuit DeMOSS, Judge: Circuit Jr., charged by Leroy Baymon, bill being of information with four counts