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California State University, Long BeachCalifornia State University, Long Beach

XI. TRAVEL WITHIN THE CONTIGUOUS UNITED STATES 30 DAYS OR MORE

A long-term daily expense rate shall be authorized when a traveler can reasonably be expected to incur expenses in one location for 30 or more consecutive days but not in excess of one year. Hotels, apartment complexes and other lodging establishments which offer cooking facilities will frequently offer weekly or monthly rates.

For domestic travel assignments of 30 days or more within the contiguous United States, an authorized per diem allowance for lodging (excluding taxes), meals and incidentals should be determined by the Appropriate Administrator, based on an estimate of actual daily expenses.

The agreed upon rate for reimbursement shall not exceed the maximum applicable federal per diem rate for the destination as published by the General Services Administration at https://www.gsa.gov/travel/plan-book/per-diem-rates.

The daily expense rate is computed by dividing the monthly lodging costs (determined by estimating actual expenses) plus an appropriate amount for meals and incidental expenses (not to exceed the amounts specified in Appendix C), by the number of days of occupancy in the rental period.  Receipts are not required for meals and incidental expenses when applying the daily expense rate.

The following recurring expenses may be considered part of the lodging cost when a traveler rents a room, apartment, house, or other lodging on a long-term basis:

  • Rental cost of a furnished dwelling;
  • Utilities;
  • Monthly base telephone charges.

Actual costs paid for lodging taxes, which are not included in the published per diem rates, may be reimbursed as a miscellaneous expense.

  1. Indefinite Travel Assignments that Exceed One Year

  2. Under the IRS one-year rule, travel away from home that lasts more than one year in a single work location is considered indefinite.  Any related travel expenses reimbursed during that period must be treated as taxable income subject to withholding for income and employment taxes (e.g., social security and Medicare).

    Accordingly, for an employee whose indefinite assignment requires a change of residence in order to undertake an assignment, who plans to return at the end of the assignment, and who expects to remain in a single location for more than one year, subsistence expense reimbursement shall be treated as follows:

    • The entire reimbursement, effective as of the first day of the traveler's assignment, shall be included in the employee's gross income subject to withholding for income and applicable employment taxes;
    • The subsistence reimbursement must be paid through the payroll system as additional income subject to withholding;
    • The reimbursement for such assignments shall be limited to 2 years.  An exception may be granted by the President to extend the reimbursement for a longer period of time; and
    • The cost of moving the employee to and from the location of the indefinite assignment shall be reimbursed in accordance with University moving policies per Human Resources Coded Memoranda.

    To compensate for additional federal and state income taxes and employment taxes owed by the employee, the reimbursement rate for subsistence expenses may be increased up to 150% of the per diem rate that has been negotiated for domestic travel of 30 days or more.

    A separate calculation of the amount of the increase must be made for each employee, taking into account each employee's additional federal and state income tax liability and liability for employment taxes.  The formula provided by the IRS for grossing up payments to cover an employee's tax liability should be used to calculate the increase.  See Appendix F for examples based on the IRS Tax Gross Up Formula.

    Under IRS regulations, the following situations also are considered indefinite assignments:

    • Indefinite Assignment Ends Prematurely
    • An indefinite assignment that is realistically expected to last more than one year shall be considered indefinite regardless of whether it actually exceeds one year.  Thus, any amounts withheld in connection with the employee's travel expense reimbursements would not be refundable if the assignment ends prematurely.

    • Temporary Assignment Extended
    • If a temporary assignment is realistically expected to last for one year or less, but at some later date is extended to exceed one year, then the assignment shall be treated as temporary until the date the employee's realistic expectations change.  Thus, travel expense reimbursements would not be taxable for the period of the assignment that was expected to be temporary.  Travel expenses reimbursed thereafter must be included in the employee's income subject to withholding.

    • Indefinite Assignment Interrupted By Trips To Former Residence Or To Normal work location
    • An indefinite assignment that is interrupted by occasional trips to the employee's former residence or normal work location shall be subject to the one-year rule.  Such return trips do not change the tax status of an indefinite assignment.