WashingtonWire - 2004-05-10

IRS Allows Sampling For Deducting Meals

U.S. companies can use statistical sampling to determine which of their employees' meal and entertainment expenses are 50 percent tax deductible, the Internal Revenue Service said last week. The revenue procedure, effective May 3, eliminates the need to substantiate every transaction. Treasury spokesperson Tara Bradshaw said large companies had requested the change.

"Providing guidance on how to use statistical sampling provides certainty and will reduce future controversy," said U.S. Department of Treasury acting assistant secretary for tax policy Gregory Jenner.

Qualified meal and entertainment expenses incurred by employees generally are 50 percent tax deductible. In some cases, such as a golf tournament where all the proceeds are donated to charity, the deductibility may be higher. The IRS-approved statistical method makes it easier for companies with large meals and entertainment accounts to determine which expenses are limited to 50 percent.



U.S. Airlines Oppose Paying More For Security

U.S. airlines are protesting efforts by the Transportation Security Administration to more than double their share of aviation security costs, to $750 million a year.

The Air Transport Association said airlines already pay an extra $1.7 billion annually for security and cannot afford the extra $435 billion TSA is asking Congress to make them pay. According to the government, $1.7 billion is passed on to travelers in the form of ticket surcharges of as much as $10.

James May, president of ATA, an airline lobbying group, said governments should be reducing fees for financially troubled carriers, not boosting them. "When they should be going south, they're going north," May said in a press briefing. "It's a tax, a new tax, and one we will vigorously oppose."

U.S. airlines may lose more than $2 billion this year as rising fuel costs undercut what is expected to be a restoration of passenger traffic to levels seen before the Sept. 11, 2001, terror attacks. U.S. airlines are cutting costs and laying off workers in an effort to remain financially viable.

U.S. Department of Homeland Security spokesperson Brian Roehrkasse said the Bush administration expects airlines to pay a fair share for aviation security. TSA has requested $5.3 billion in funding from Congress for such things as passenger and baggage screening, a figure that assumes a $750 million contribution by the airlines, up from $315 million the airlines pay now.



House Panel Seeks Airline Missile Defense System

A House of Representatives subcommittee reported out a bill requiring the Federal Aviation Administration to move more quickly to approve airline systems designed to protect the U.S.'s 6,800 commercial planes against shoulder-launched missiles. The House transportation subcommittee on aviation said FAA should expedite approval of the man-portable air defense systems systems, Manpads, after more than one year of research and development by the U.S. Department of Homeland Security.

"Shoulder-fired missiles continue to pose a serious threat to civil aviation," said Rep. John Mica (R.-Fla.), the panel's chairman. "Continuing DHS' anti-missile research is critical to the long-term security of the aviation industry."

The bill also directs the Bush administration to seek treaties with other countries to stop the proliferation of missile launchers and to give the U.S. State Department more ability to buy launchers to keep them out of the hands of terrorists. The legislation also requires a report on ground defenses at U.S. airports. The bill next faces approval by the full House Committee on Transportation and Infrastructure. There is no similar bill yet in the Senate.

~Patty Donmoyer