i saw this on craigslist, and was wondering if the $12.00 per hour non-taxed per diem was legal.
Electricians ~$1592.00 to $2104.00 Per Week!!!
1st, 2nd class Electricians and Electrical Foremen are being sought for a 9 month to a year shut-down of a Gas Plant in Lower Plaquemines Parish, LA. This project is anticipated to begin ramping up in Mid-October to early November 2006.
We are looking for 40 Journeymen Electricians and 60 class B Electricians (cable pullers)
Lodging and meals will be provided at no cost to the employees. Direct TV and Color Television provided.
Employees will be working 6 each 12 hour shifts per week (72 hours).
Wages:
1st class- ST: $10.00 per hour taxable salary + $13.00 per hour, non-taxable per diem ($23.00 per hour)
OT: $15.00 per hour taxable salary + $11.00 per hour, non-taxable per diem ($26.00 per hour)
Total compensation for 72 hour work week = $1752.00
2nd class- ST: $9.00 per hour taxable salary + $12.00 per hour, non-taxable per diem ($21.00 per hour)
OT: $13.50 per hour taxable salary + $10.00 per hour, non-taxable per diem ($23.50 per hour)
Total compensation for 72 hour work week = $1592.00
Foreman Electrician – ST: $14.00 per hour taxable salary + $13.00 per hour, non-taxable per diem ($27.00 per hour)
OT: $21.00 per hour taxable salary + $11.00 per hour, non-taxable per diem ($32.00 per hour)
Total compensation for 72 hour work week = $2104.00
All interested qualified applicants should send resume and contact information to [email protected] to be considered. Please type “Industrial Electrician†in subject line of email. Or fax information to 504-436-6072 Attention: Phil Wheeler
Ameri-Force Craft Services, Inc. EOE, DFWP
Replies
I'd think so. It would be a reimbursement of travel expenses the same as if you traveled for work and the company reimbursed you for meals, car rental, lodging, etc. There are probably legal limits about how large the per diem may be (it really has to be what would be reasonable for expenses, not wages for the work in disguise).
If the wages were much less than prevailing, for example, they paid $6 per hour for a journeyman electrician and $20 per hour per diem, then they'd be on shaky legal ground. But if $10 is reasonable for an electrician of that class in that area then they are fine.
You might want to run it by your accountant or lawyer to be sure you're safe.
I don't think that it is basing it on an hour basis.
There are standards for housing and meals based on the location.
Could also reimburse for lcoal travel. They might be able to justify figuring an average value for that.
And I see that they offer two different rates.
Oh, and I see that they already offer room and board. So that is out.
Based on all of that I don'tthink that it is legal.
You're right. Per diem means "per day". Reimbursing on an hourly basis is suspect unless there is a daily limit.
Let's don't forget tht we're dealing with electricians, and you need to break things down to the most basic concept.
They could have said, for the class A guy on ST, that the perdiem is $276/day ($23*12 hr) but then Sparky would have spent the entire project trying to calculate the effective hourlyrate.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
3 dollars an hour extra for overtime on an industrial job and they are advertising on craigslist????????????????????????
That sounds like a reasonable deal though the rate seems a little on the high side. I have seen $35 per diem excluding transportation expenses, lodging, and cell phone (all billed separately) for an engineer.These can be good deals (read... very profitable) if you can stand to be out of your community, away from family and friends for long periods, living in a cheap hotel room or a FEMA-type trailer, long long hours on site, no benefits,and uncertainty in employment. You can make and save a lot of money very quickly as it is hard to spend money working 72 hrs a week and then catching up on sleep on your only day off. If you look further into it ask about the fine print of the job. They may not provide health insurance, sick time, transportation to get home or guaranteed employment. Meaning that you might work for three months and then show up one monday morning and find that another GC has taken over the project and you are in podunk LA and SOL, or that the GC you are working for has gone bankrupt and is no longer issuing paychecks.These jobs tend to only work well for young guys or ex-service members who can stand the hard pace and community separation, or that is the experience of a friend of mine who had such a job.day
I could most certainly be mistaken, as my wife is the tax whiz...But within reason, a company can provide whatever amount they want as "per diem" to their employees. They can simply offer it, or it can be negotiated. And it can indeed be an hourly rate, at least for meals and incidental expenses.However, come tax time, my belief is that you offest the amount of per diem that you are paid against the government's published per diem rates. Those amounts can be easily googled (I think piffin wrote that), simply google "US domestic per diem rates". Or something similar.Domestic rates are set for the entire year, unless extenuating circumstances like Katrina come into play. International per diem rates are set on a month-by-month basis.How to digest this? You get a certain amount of per diem from your employer. It can be per hour away from home, or a flat amount per day. Regardless, it all adds up to a certain amount of money per day.That amount is then offset against the government's per diem allowances that are published.I think that you are allowed deduct up to the gov't rate with NO receipts for your expenses. If you have receipts, you may be able to deduct more.Whatever you receive in excess of the government's rates that you don't have receipts for could considered taxable income. For meals, the DoD or GSA charts usually allow something like $40-$50 a day for meals for most domestic cities. The rates for first and last day are usually 75% of the daily rate. Per diem for housing is on top of that for meal expenses.Lemme see if I can find a link for New Orleans:http://www.gsa.gov/Portal/gsa/ep/contentView.do?queryYear=2006&contentType=GSA_BASIC&contentId=17943&queryState=Louisiana&noc=TAnd there may very well be per diem exceptions that this company knows about that I don't, or that haven't bee published on the DoD or GSA pages.I'm not a CPA, but I did sleep in a Holiday Inn Express last week. And their rate exceeded the allowable per diem. And I lost my receipt.Mongo
I think the per diem for a class A guy is $156 ($13*12hr).
Depends on if you use Cajun math ...
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
"non-taxable per diem" no such thing.
BS, tell the IRS that. They publish allowable rates. Google it.
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If you look at the IRS site, I believe you will find that what I said is true.see chapter 13 of Publication 535, Business Expenses, or Revenue Procedure 2005-67, 2005-42 I.R.BNote the IRS uses the words "travel expense." Travel expenses may or may not be DEDUCTABLE, but they are certainly not "non-taxable." For the most part actual lodging is deductable. But "Lodging and meals will be provided at no cost to the employees," the deduction appears to be $0.For the most part a per diem food DEDUCTION is somewhat above $31 with no reciepts. But refering to the above quote, it appears the deduction is again $0.I would suggest that anyone who is considering this offer find a tax professional who will pay interest and penalties if their advise is in error.
Edited 9/18/2006 12:33 am by GHR
The question is not about the deductability of expenses.But if EMPLOYER REMINBURSED EXPENSES are taxable.And yes the employer can reimburse a fixed per deim rate that is not taxable.
You must be right."If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Reimbursements treated as paid under nonaccountable plans, as explained later, are reported as pay."I am sure that this quote from the IRS is in error. Perhaps you could inform them of their error. (You do know the difference between accountable and nonaccountable?)
"You must be right."Thanks for acknowledging that."I am sure that this quote from the IRS is in error."Actually the IRS makes lots of errors. Every year, around tax return time there are news stories about the mistakes that the IRS makes. However, I did not see one this time.""If you are an employer and you reimburse employee business expenses, how you treat this reimbursement on your employee's Form W-2 depends in part on whether you have an accountable plan. Reimbursements treated as paid under an accountable plan, as explained next, are not reported as pay. Reimbursements treated as paid under nonaccountable plans, as explained later, are reported as pay.""That is right.However, I know what an account plan is. The IRS knows what an accountable plan is.An accountable plans does not necessarily require that each penny be accounted for."Per Diem and Car AllowancesYou may reimburse your employees under an accountable plan based on travel days, miles, or some other fixed allowance. In these cases, your employee is considered to have accounted to you for the amount of the expense that does not exceed the rates established by the federal government. Your employee must actually substantiate to you the other elements of the expense, such as time, place, and business purpose. "http://www.irs.gov/publications/p535/ch13.html#d0e11094Also table 13-1
--- And yes the employer can reimburse a fixed per deim rate that is not taxable. ------ An accountable plans does not necessarily require that each penny be accounted for. ---From the document you reference, the pennies that do not have to be accounted for are "the amount of the expense that does not exceed the rates established by the federal government.""Per diem allowance. If your employee actually substantiates to you the other elements (discussed earlier) of the expenses reimbursed using the per diem allowance, how you report and deduct the allowance depends on whether the allowance is for lodging and meal expenses or for meal expenses only and whether the allowance is more than the federal rate. "Or, to be more explicit, from Table 13-1. Reporting Reimbursements:"IF the type of reimbursement (or other expense allowance) arrangement is under
An accountable plan with:
Per diem or mileage allowance exceeds the federal rate:
Adequate accounting made up to the federal rate only and excess not returned THEN the employer reports on Form W-2
The excess amount as wages in box 1. The amount up to the federal rate is reported only in box 12—it is not reported in box 1. "In other words, if the employer gives a flat (hourly, daily, or whatever) per diem rate that exceeds the federal rate with no further expense documentation required, then the excess over the federal rate is wages, and TAXABLE. Period.Rebeccah
Ok, then if they are paying a per diem in excess of the set rate, then some part is taxable. It sounds like the employer is paying a lower wage to benefit from lower social security,overtime wages and insurance costs. In the end if it is more than allowable would the employer be responsible for matching social security and be responsible for the additional overtime pay because of the additional tax liability to the employee ?I'm confused.
--- It sounds like the employer is paying a lower wage to benefit from lower social security,overtime wages and insurance costs. In the end if it is more than allowable would the employer be responsible for matching social security and be responsible for the additional overtime pay because of the additional tax liability to the employee ? ---I am not a tax expert or a labor law expert, but I would think at the least the employer would be responsible for Social Security and Medicare taxes on the unaccounted-for surplus over the federal per diem rate (at least up to the wage limit for those taxes), since it must be reported to the IRS as wages.Of course, if the employee documents actual expenses to match the increased per diem rate, then none of it's taxable. What do you think the odds are? ;-)Rebeccah
"Of course, if the employee documents actual expenses to match the increased per diem rate, then none of it's taxable. What do you think the odds are? ;-)"If you will note, they are already provide run and board.So the allowed per diem is ZERO.
"So the allowed per diem is ZERO."It appears we are in agreement.
It would be possible for the employees to document other daily expenses than room and board, I'd expect--expenses unique to that job situation. Still, accounting for 11/h seems like an ambitious task.
""So the allowed per diem is ZERO."It appears we are in agreement."Just to make thing clears when you are quote a single sentence in a long thread.In this particular case as the employer is providing R&B. They there is no per diem that can be paid taxfree.But, in general an employeer can pay a tax free per diem, in lieu of actual expenses, for out of area work if the per diem is no more that then federally allowed limit and it is for a document business purpsoe.
I believe that following the IRS rules is very important in determining what is and is not taxable.record keeping requirements changes from time to time.
what this is: the company will rent a house or hotel and pay for food. proberly a crock pot. add a tv and direct tv. Then they are going to claim this is worth 12 a hour. In reality you going get a check for 10 dollars a hour and thats it. a bed and meal.there be twenty people in the same house.Alot of contractor do that here.
Edited 9/20/2006 10:36 pm by brownbagg
"I owe my soul to the company store..."
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--- what this is: the company will rent a house or hotel and pay for food. proberly a crock pot. add a tv and direct tv. Then they are going to claim this is worth 12 a hour. In reality you going get a check for 10 dollars a hour and thats it. a bed and meal.there be twenty people in the same house.Alot of contractor do that here. ---In other words, "If it seems too good to be true, it probably is".Now, *this* I believe much more than that the company is willing to run afoul of the IRS over excessive per diem rates.Rebeccah
As Bill points out, it is deductable to the emploers accounting, it is non taxable for the employees accounting. Millionms of us have been doing it for at least a generation now.
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And do you know the difference between accountable and nonaccountable plans?If you think the IRS pub I quoted is wrong, tell the IRS. I am sure they will correct their pub for you.I would suggest anyone who is considering payments of these types to talk with a good CPA.
"accountable and nonaccountable plans?"No - but I'm sure my accountant does.You feel better now?
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That explains why we have different views on this matter.
If you get your "per diam" in cash with no paper trail then it's non taxable.
Unless you ask the IRS, but that would be like asking the city if you need a permit for what ya want to do."I'm here to chew bubble gum & kick azz, & I'm all out of bubble gum" Rowdy Roddy Piper
My take on the whole thing is it's a way to get a 72 hour week out of someone but not have to pay the high overtime or be required to match the social security payments. It sounds good for everyone but the government.
Do a search and you can find a govt sponsored page of allowed maximum per diem expenses. It varies from city to city. And remember too that there were several special exclusions written for Louisianna and the Gulf area, some doubling the amts normally deductable to help encourage people to get it rebuilt.
A per diem is a re-imbursement made because there are certain extra expenses and losses incurred when working out of town. i've earned it and I've apid it in various situations. In its most basic form, it is to cover housing and meals, but there are other costs too. Laundry and travel and entertainment...and there is some sort of value to having to be away when your duaghter is having her first this or that happen in her life. The per diem helps some guys fly home for those occaasions... whatever.
But the phrase translates "per day". I have never heard of it being offered or paid on a hourly basis. Agaain, maybe there is a special allowance that has been written for hurricane follow-up.
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To all those saying "no" and "no such beast" (which, to be fair, was my first reaction):
http://fin.admin.state.ak.us/dof/travel/resource/tax.pdf#search=%22per%20diem%20taxable%22
Per diem and other travel expense payments for most employees are nontaxable. However, they are only nontaxable as long as the employee is away from their tax home. It is relatively easy to determine the tax home for most state employees as they work at one main location, their PCN duty station. However, where an employee does not work the majority of their time at their duty station, it becomes more difficult to determine the employee's tax home, and therefore whether per diem is taxable.
And from http://64.233.161.104/search?q=cache:DKfHUsLUDKUJ:www.irs.gov/pub/irs-regs/per_diem_faq_%26_a_v1.pdf+per+diem+taxable&hl=en&gl=us&ct=clnk&cd=3
6. When are per diem payments taxable?
Payments will be taxable to the employee when any of these situations are true:
• No expense report is filed with the employer,
• The expense report filed does not include the date, time, place, amount and business purpose of the expense,
• A flat amount is given to the employee and no expense report is required, or
• Per diem is paid in excess of the allowable standard federal rate.
These per diem payments listed above would be treated as wages and employment taxes are due from the employer
The link to show the federal rate was too slow, so I don't know if the listed amounts were within the thresholds. Also, as R&B is being provided, it might be hard to substantiate the amount. Nonetheless, there are non-taxable per diems, if the rules are followed.
I can think how there might be some confusion too as the term is used differently for some professional fees.What this example is dealing with is clearly a per diem reimbuirsement rate. But there are professional rates that are based on a per diem contract. For instance, I built a house for a doctror here who has spent 20-30 years working around the world as a fill in for others in his profession when they break a leeg, go off on a ski vacation, take a sabbatical, or whatever that keeps them away from their position. Their employer or partnership/practice is forced to find a replacement at per diem rates, which I understand are much higher ( he has to be willing to travel at a moments notice) than one in his line normally earn. Another house I built was for an electrical engineer with Ford Aerospace. His home was in California and he worke most of his life in japan for them. he was paid a taxable salary, about the same that it would have been in CA, but he was then also paid a per diem on top of his salary to cover his expenses for living out of the country. It was a very generous rate, he tells me. None of that per diem was taxable.he was delighted with another benefit connected to that too. He bought a Ranch house for $35,000, rented it out while he was gone for the most part, letting the renters make the payments, and then lived in it again for a couple years while I built the house here. He then sold it for a couple million bucks.I have seen ads for lawyers, and engineers provided by a perdiem employment service who will tyravel and provide their servicesat a certain PD rate
I have been requested to travel to consult a couple three times. I charged my regular hourly rate, plus travel expense, plus a per diem charge for other expenses.
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For allowable per diem rates I like the following, which is what my business uses:
http://www.gsa.gov/perdiemrate
The default minimum GSA approved per diem right now is $60 for lodging and $39 for meals and incidental expenses. It's higher than that in a lot of places, so always good to check the web site.
I suppose that you could break down per diem payments by the hour, however, the whole point is that you're supposed to be paid for the cost of being away from home, whether you work that day or not.
The rationale for per diems being non-taxable (up to a certain amount) is that you're being reimbursed for living expenses that you wouldn't have occured if you weren't away from home (hotel vs. your own bed, dinner out instead of at home). Since the ad says that meals and lodging are provided you would only be eligible for the 'incidental expenses' component tax-free. Incidentals are $3/day.
This looks shady.
Is it legal?
I read it a couple of times. They spell out exactly what they are paying and what monies will and will not have taxes withheld from it.
They may be guilty of not telling the whole story and being a bit slimey, but I think they have covered their legal requirement.
Louisiana is an employment at will state... it is what it is.
I agree that the listing appears shady. As others have stated, per diem is a daily rate. It does not make sense that the daily rate changes based on the number of hours worked. Daily expenses are constant, regardless of the number of hours worked. It appears to be a scam to avoid paying true overtime.
Per diem eligibility is based, not on the distance from home, but the distance from the office or primary work place. For example, I may live in Rock Hill, South Carolina, but am employed through and agency whose majority of work is located in Charlotte, NC. I will not be able to receive per diem for working in Charlotte, because that is the location of my employment. However, I could be paid per diem to work in Rock Hill.
Finally, there is a limit to per diem's non-taxable status. One can draw per diem only a year as a non-taxable income.
This comes from one who has spent 15 years of a 30 year career working in other states and countries.
It has been a long time but if I remember right a person can only take 80% of what he actually spends on meals as tax deductible but I am not sure about lodging.
What they are willing to pay for a foreman electrician is poor at best. Those guys are money hungry and not willing to pay their employees.
If one looks at what they are paying management it is a shame. College students just graduating are making more than that. Kind of reminds me of companies like Jeld Wen.
It is legal.
My son-in-law has made a substantial amount of money while taking jobs out of state and overseas (Japan). He has always made quite a bit of money on a per diem basis. He has also survived a very thorough IRS audit about other issues. I'm sure the IRS scrutinized his entire return at that time.
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