Convenience
of employer test - what is it?
(Revised December 2006)
If you are deducting employee business
expenses and the IRS questions your deduction, you will need to prove that
the expenses were not reimbursable AND that they meet the "convenience
of employer" test. Employee business expenses are generally deductible,
if they meet two requirements:
Generally, the convenience of employer test is met if the employee cannot properly perform his/her job without otherwise incurring the expense or having the particular property available. While the test sounds easy to meet, the IRS has imposed some very tough requirements in meeting this test. For example, merely being able to perform a job or activity more efficiently is not enough to meet this test. Finally, your success or failure in meeting this test could be based upon small variations in the factual situation.
For example, in a private letter ruling (PLR 8725067), the IRS held that a computer analyst who was on 24-hour call, responsible for maintaining nationally linked computer systems, and living dozens of miles from the nearest computer site, could not deduct his home computer that he needed in case of an emergency. Since the employer provided him with a computer at work, he flunked the convenience of employer test even though his home was located miles from his office. The IRS concluded that the long distance factor was major inconvenience; however, the employee could still do his job. If the employee was prohibited from using his office during certain times (e.g. security or maintenance concerns), the outcome might have been different.
The best situation for meeting this
test is where the employer does not provide the tools involved with the
activity. The following example from the IRS regulations demonstrates this
fact.
| Z, which is in the business of providing delivery services, employs B as a courier. Z does not provide delivery vehicles and explicitly requires its couriers to own an automobile or motorcycle for making deliveries. B's use of B's automobile or motorcycle for making deliveries is for the convenience of Z and is required as a condition of employment. |
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