Tax Fraud In the Travel Nurse Industry

Not all tax fraud is intentional as the rules can be quite confusing. Below are a list of common schemes and misconceptions that are common in the Travel Nurse industry.

Faking a tax home

There are many travelers milking the system, using their parents address as a tax home and working in the same metropolitan area more than 12 months. They claim a tax home on their permanent residence forms that the company requires and often change companies to avoid the scrutiny of their current travel company after the 12 month limit is reached. Some travelers conveniently change addresses, using different relatives addresses  to work at home and receive tax free stipends. Some recruiters encourage this as well.

Not reporting income to local tax jurisdictions

Some travelers have a tax home in an area that has school district, municipal or city taxes. Income earned outside of the local jurisdiction MUST be reported to the home jurisdiction.

Company reports and/or withholds taxes in the company's state of domicile or does not report state wages at all

A company is required to report wages earned at the source of the income. The agencies location has NO bearing on work performed by the traveler in another state. .

Recruiters encourage travelers to use an alternative address or lie on the permanent residence form

No explanation needed

What is not Fraud (or unfair)

Assignment addresses on W-2's or not withholding taxes for home states

Sometimes an agencies payroll software is not sophisticated enough to handle multiple jurisdictions. The only way to make the software work is to use the assignment address

A company's use of a 50 mile or 30 day rule to determine eligibility of tax free allowances.

IRS Code Section 3121(a)(20) requires a company to have a reasonable belief that an employee will qualify for tax free away from home allowances. As it applies to the traveler, this means that the company must 1) have a reasonable belief that an employee is away from their tax home and 2) has not been in the same metropolitan area more than 12 months. To determine this and limit recordkeeping burdens, the company can establish a benchmark that is used for every employee. Hence, we have permanent tax residence affidavits, 50 mile, 30 day rules and other similar policies. Determination of the travelers tax home and eligibility of tax free allowances are NOT based on these company benchmarks. The employee bears the final responsibility in determining his or her status and the company benchmarks apply to the company, not the traveler.

Refusing to provide double housing stipends for spouses or significant others sharing a temporary residence

Court Cases of Interest to Travelers

Tax Home involving a Traveling Evangelist

Evangelist had no duplicating living expenses and returned home on infrequent and short durations, using a relatives home or a church parsonage.

Traveling Expenses Subject to Withholding and Payroll Taxes

Airline pilots transportation, meals and lodging to and from work base in Alaska are taxable even though he maintained a home in MN. Since his main place of work was in Alaska, that was his tax home, not his permanent home in MN..

Application of the "Sleep and Rest Test"

A ferry boat captain was away from his main terminal for 16-17 hours and was allowed to deduct meal and incidentals. (Note: For traveling healthcare professionals, this case is applicable to the sleep and rest test, not the determination of a tax home. Transportation worker's tax homes are generally the main station of work and their travel, as a course of their duties as a transportation worker, can be to the same city. The 12 month temporary limitation does not apply to these cases.

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