Commuting expenses: what is a "metropolitan area"?

The costs of traveling from one's residence to a fixed work location generally are considered commuting expenses and are not deductible. However, under revenue ruling 1999-7, such expenses are deductible when the travel is between the taxpayer's residence and one of the following:

* A temporary work location outside the metropolitan area where the taxpayer lives and normally works.

* A temporary work location, regardless of distance, if the taxpayer has one or more work locations away from his or her residence.

* Another work location if the taxpayer's residence is his or her principal place of business under the home once rules in IRC section 280A(c)(1)(A). Unfortunately, revenue ruling 1999-7 does not define "metropolitan area."

The question was considered for the first time by the Tax Court in Wheir v. Commissioner. Corey L. Wheir was a union boilermaker living and working in Wisconsin Rapids, Wisconsin. The union office assigned him jobs all over the state ranging from one day to several months, though most did not warrant overnight travel. He received the assignments by phone and did not report to locations other than the job sites. Under union rules the taxpayer was not allowed to decline any assignments.

On his tax return Wheir deducted costs related to local travel for jobs farther than 35 miles from his residence. The IRS disallowed all claimed travel expenses on the basis that since Wisconsin Rapids was not a metropolitan area as defined by the U.S. Census Bureau, the entire state of Wisconsin should be considered the taxpayer's normal work area for purposes of applying revenue ruling 1999-7.

Result. For the taxpayer. The court disagreed with this interpretation as revenue ruling 1999-7 neither defines "metropolitan area" nor references another official standard. If the court were to follow the IRS's interpretation of "metropolitan area," taxpayers in rural areas would be at a disadvantage to those in more populated areas. As a result, the taxpayer's original position was sustained.

CPAs should be aware that, as a Tax Court summary opinion, Wheir cannot be cited as precedent. However, it does provide some practical guidance with respect to local transportation deductions when the metropolitan area of the taxpayer is unclear.

* Corey L. Wheir, TC Summary Opinion 2004-117.

Prepared by Vinay S. Navani, CPA, principal of Wilkin & Guttenplan PC, East Brunswick, New Jersey.