Rev. Rul. 61-67

Advice has been requested whether the Internal Revenue Service continues to adhere to the positions taken in I.T. 3842, C.B. 1947-1, 11, with respect to the deductibility of traveling and transportation expenses incurred by a member of a state legislature whose duties as such constitute his only trade or business.

Although I.T. 3842 considers the deductibility of such expenses both by a member who is, and by a member who is not, carrying on any other business, it is reconsidered herein only to the extent it concludes that a member who has no other business may not deduct his traveling and transportation expenses incurred in attending sessions of the legislature.

Section 162(a) of the Internal Revenue Code of 1954 provides, in part, that among the ordinary and necessary business expenses allowable as deductions are traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business.

A taxpayer's `home' for traveling expense purposes is generally held to be at his place of business or employment, which is often called his post of duty. But where a taxpayer has two occupations, or is carrying on a single occupation at two continuing posts of duty, which require him to spend a substantial amount of time in each of two cities, his `home' is held to be at his principal place of business. Thus, a taxpayer cannot deduct his expenses for meals and lodging while at his principal post of duty, even though he is away on such occasions from his residence and minor place of business. On the other hand, a taxpayer who is on a business trip requiring at least an overnight absence from his principal post of duty may deduct his expenses for meals and lodging while his work requires him to be at his minor post of duty, even though he maintains his family residence at the latter location. See Rev. Rul. 54-147, C.B. 1954-1, 51; Rev. Rul. 54-497, C.B. 1954-2, 75, at page 80; and Rev. Rul. 55-604, C.B. 1955-2, 49.

The principal position to be reconsidered is the third sentence of the fifth paragraph of I.T. 3842, holding that where an individual's duties as a state legislator constitute his only business, no deductions for meals and lodging while attending the legislative sessions may be allowed. The other position in question is the first sentence of the seventh paragraph of I.T. 3842, concluding that a member of a state legislature who has no other business may deduct transportation expenses only for those trips originating from the state capital which are actually undertaken for the purpose of discharging state business. Both such positions were based upon the premise that a member's duties as a state legislator were performed primarily at the state capital. Thus, a state legislator having no other business was deemed to have his only post of duty, and hence his `home' for traveling expense purposes, at the state capital where sessions of the legislature are conducted.

In the latter aspect, I.T. 3842 extended to the members of state legislatures the decision in George W. Lindsay v. Commissioner , 34 B.T.A. 840, concerning the `home' of Members of Congress for traveling expense purposes, a decision now obsolete even as to Members of Congress in view of the last sentence of section 162(a) of the Code. Upon reconsideration, it now appears that the Lindsay decision should not have been extended to state legislators. The Board of Tax Appeals there held that the `home' of a Member of Congress is located, as a matter of law, in the District of Columbia because sections 1795 and 1796 of the Revised Statutes, 4 U.S.C. 6 and 7 provide that the District of Columbia shall be the seat of government of the United States and that all offices attached to the seat of government shall be exercised in the District of Columbia, and not elsewhere, except as otherwise expressly provided by law. Comparable provisions of law are not to be found in the statutes of all states, and it now seems unreasonable to suppose that Congress intended different tax treatment of the members of state legislatures according to whether there are or are not parallel provisions in the laws of particular states.

Since the time of the Lindsay decision and I.T. 3842, it has come to be more generally recognized that members of legislative bodies can have duties to their home localities and constituents which involve the performance of official duty while the legislative body is not in session. For example, it is now provided that Members of Congress are entitled to have an office in each Member's home state or district, and provision is made for limited reimbursement of official expenses incurred in its operation. See 2 U.S.C. (1958 edition) 52, 53, 122 and 122(a). It would seem that members of state legislatures must at times be called upon for the performance of similar services in the areas which they represent, as may be evidenced by the increasing tendency of states to pay their compensation on a biennial basis, with provision in some cases for additional allowances during regular and special sessions of the legislature. The Service has recognized that services to constituents may be official in character. See, for example, I.T.4095, C.B. 1952-2, 90, as to letters reporting the member's activities. To the extent that the duties are in fact similar, the Service perceives no justification for regarding them as official in the case of Members of Congress but as unofficial when performed by members of state legislatures.

It is hence recognized that a member of a state legislature who is in fact called upon to perform services while the legislature is not in session on behalf of the area that he represents and its residents is thereby discharging the duties of his office and carrying on his trade or business as a member of the legislature. Such duties may include, for example, consultation with and reporting to local officials, local business interests, and others as to legislation which the community needs, or discussing proposed legislation which a constituent favors or opposes. If the member is usually required, as a practical matter, to perform such services in the area which he represents, the Service will treat that area as a place of business or post of duty of the member for the foregoing purposes.

Whether the area which the member represents in the state legislature or the state capital is his principal or minor post of duty depends primarily upon the length of time which he is usually required to spend at each of those locations for business purposes. If sessions of the legislature are relatively short or are held only biennially, the area which the member represents in the legislature will generally be treated as his principal place of business or post of duty for such purposes if he is not in fact required to spend most of his time at the state capital because of committee assignments or for similar business reasons. Hence, he may deduct his traveling expenses (including the cost of meals and lodging) while on overnight trips incident to his attendance at sessions of the legislature at the state capital.

If a member's duties usually require him to remain at the state capital most of the year, the state capital must be treated as his `home' for traveling expense purposes, so that his living expenses while there are not deductible. In such cases, however, the area which he represents is his minor post of duty if he is ordinarily required to spend time there in the performance of official duties. The member accordingly may deduct traveling expenses incurred on business trips that are at least overnight trips to the area which he represents in the legislature even though he maintains his family residence there, but the deduction allowable for his meals and lodging while at the family residence is limited to that portion of the family expenses for meals and lodging which is properly attributable to the taxpayer's presence there in the performance of his duties. See Rev. Rul. 55-604.

State legislators having two posts of duty may also deduct the cost of their transportation on all trips made between such locations for business reasons, whether or not they are overnight trips.

The traveling and transportation expenses which may be deducted in accordance with the foregoing are deductible from gross income in computing adjusted gross income under the provisions of section 62(2) of the Code.

I.T. 3842 is modified to accord with the foregoing.