Meetings & Conventions: Planner's Portfolio April
The Law & the Planner
By Jonathan T. Howe,
EASING THE BURDEN OF TAXATION
Reviewing the basics might make filling out forms next year
a bit less daunting
Just as Julius Caesar feared the ides of March,
U.S. taxpayers wish the ides of April would never come. Taxes are
an issue for planners both on a professional and a personal level:
They have to make sure their organization and the attendees will be
able to write off the meeting, and they have to keep track of their
own travel and entertainment expenses.
Many planners inform interested parties that expenses incurred
attending an event might be deductible under Section 162 of the
U.S. Code. But planners often do not know the rules of deduction.
Not only is the substance of the meeting program important, but its
format can be as well. For meeting expenses to be deductible,
according to the Internal Revenue Service, they must advance the
“trade or business” of the party claiming the deduction (which can
be an attendee, the attendee’s employer and the host organization).
The IRS considers a trade or business to be an activity undertaken
with the expectation of making a profit later.
Planners should emphasize in any promotional and collateral
material the need for people to attend the program to advance their
trade or business.
The next hurdle to overcome is showing that the expense is
“ordinary and necessary.” Regulations state that an expense is
ordinary if it is “normal, customary or usual” for the business to
incur under the circumstances. A final requirement is that the
expense must be “reasonable.” Unfortunately, what might be
reasonable to one party might not be to the IRS; however, if it is
an expense that can be proven legitimate under the circumstances,
generally the reasonableness test is met. For instance, it is
normal for Bill Gates to stay in the penthouse, but not for his
employees to live so lavishly.
For both the meeting’s F&B and when an individual takes a
business associate out, food, beverage and entertainment expenses
are limited to 50 percent of the actual costs. For the host
organization’s accounting, sleeping rooms are 100 percent
deductible, as is ground transportation. So if planners take a hit
on the room rate and negotiate hard on F&B, the organization
saves money at tax time. Remember, hotels today look at the total
amount of money the meeting generates there’s a certain figure they
expect to make, but they are not picky about where it comes
Deductions are clearly defined for business travel. For meals and
lodging to qualify, you must “be away from home,” home being your
place of business. In the past, the IRS required you to be away
overnight. Now, travelers can deduct meals and lodging on a
business trip as long as they are away sufficiently long to require
“rest” or “sleep,” and generally being gone for more than eight
hours in a day qualifies.
Transportation to and from a business meeting is deductible as
long as you leave your business and return to it. Deducting meals
for a day trip would be questionable, unless you are entertaining a
client. People who want to bring their spouses should note that
travel, meal and lodging expenses for the spouse will be deductible
only if that individual also works for the company and his presence
serves a business purpose.
Similarly, if the meeting hotel is offering single and double
rates, the IRS allows you only to deduct the single rate if the
second party is not allowed for deduction purposes. Thus, to help
out attendees, meeting planners should negotiate one single/double
rate, not separate rates for a single vs. a double.Jonathan T. Howe, Esq.,
is a senior partner in the Chicago and Washington, D.C., law firm
of Howe & Hutton, Ltd., which specializes in meetings, travel
and hospitality law. Legal questions can be e-mailed to him at firstname.lastname@example.org.
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