SECTION 11. EFFECT ON OTHER

DOCUMENTS

Rev. Proc. 98–63, 1998–52 I.R.B. 25, as modified by Announcement 99–7, 1999–2 I.R.B. 45, is hereby superseded for mileage allowances that are paid both (1) to an employee on or after January 1, 2000, and (2) with respect to transportation expenses paid or incurred by the employee on or after January 1, 2000. Rev. Proc. 98–63, as modified by Announcement 99–7, is also hereby superseded for purposes of computing the amount allowable as a deduction for transportation expenses paid or incurred on or after January 1, 2000.

DRAFTING INFORMATION

The principal author of this revenue procedure is Edwin B. Cleverdon of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Mr. Cleverdon at (202) 6224920 (not a toll-free call).

miles with respect to which the advance was paid are not substantiated within a reasonable period of time and the employee does not return the portion of the allowance that relates to those miles within a reasonable period of time, the portion of the allowance that relates to those miles is subject to withholding and payment of employment taxes no later than the first payroll period following the end of the reasonable period. See § 1.62– 2(h)(2)(i)(A). (3) In the case of a mileage allowance that is not computed on the basis of a fixed amount per mile of travel (e.g., a mileage allowance that combines periodic fixed and variable rate payments, but that does not satisfy the requirements of section 8 of this revenue procedure), the payor must compute periodically (no less frequently than quarterly) the amount, if any, that exceeds the amount deemed substantiated under section 9.01(1) of this revenue procedure by comparing the total mileage allowance paid for the period to the applicable standard mileage rate in section 5.01 of this revenue procedure multiplied by the number of business miles substantiated by the employee for the period. Any excess is subject to withholding and payment of employment taxes no later than the first payroll period following the payroll period in which the excess is computed. See § 1.62–2(h)(2)(i)(B)( 4 ).

(4) For example, assume an employer pays its employees a mileage al

lowance at a rate of 35 cents per mile (when the business standard mileage rate is 32.5 cents per mile). The employer does not require the return of the portion of the allowance (2.5 cents) that exceeds the business standard mileage rate for the business miles substantiated. In June, the employer advances an employee $175 for 500 miles to be traveled during the month. In July, the employee substantiates to the employer 400 business miles traveled in June and returns $35 to the employer for the 100 business miles not traveled. The amount deemed substantiated for the 400 miles traveled is $130 and the employee is not required to return the remaining $10. No later than the first payroll period following the payroll period in which the 400 business miles traveled are substantiated, the employer must withhold and pay employment taxes on $10.

.02 The portion of a FAVR allowance, if any, that exceeds the amount deemed substantiated for those miles under section 9.01(2) of this revenue procedure is subject to withholding and payment of employment taxes. See § 1.62–2(h)(2)(i)(B).

(1) Any periodic variable rate payment that relates to miles in excess of the business miles substantiated by the employee and that the employee fails to return within a reasonable period, or any portion of a periodic fixed payment that relates to a period during which the employee is treated as not covered by the FAVR allowance and that the employee

26 CFR 601.602: Tax forms and instructions. (Also Part I, sections 3504, 6011, 6061, 6071; 31.3504–1, 31.6011(a)–7, 31.6061–1, 301.6061–1, 31.6071(a)–1.)

Rev. Proc. 99–39

Table of Contents SECTION 1. PURPOSE SECTION 2. BACKGROUND AND CHANGES SECTION 3. SCOPE SECTION 4. DEFINITIONS SECTION 5. APPLICATION FOR THE FORM 941 e-file PROGRAM SECTION 6. ACCEPTANCE IN THE FORM 941 e-file PROGRAM SECTION 7. ELECTRONIC FILING OF FORM 941 SECTION 8. ADJUSTMENTS TO FORM 941 SECTION 9. RESPONSIBILITIES OF AN ELECTRONIC FILER SECTION 10. ALTERNATIVE FILING PROCEDURES SECTION 11. REVISION OF COMPUTER SPECIFICATIONS BY THE SERVICE SECTION 12. ADVERTISING STANDARDS SECTION 13. REASONS FOR SUSPENSION SECTION 14. ADMINISTRATIVE REVIEW PROCESS FOR PROPOSED SUSPENSION SECTION 15. EFFECT OF SUSPENSION

October 25, 1999 532 1999–43 I.R.B.