May Mag Preview: Update on Trade Show Tax Write-Offs

In the next few days, the May issue of Textile Services will arrive in laundry operator in-boxes and homes. A key topic for this month’s issue concerns the upcoming Clean Show and what new tax breaks or restrictions the Internal Revenue Service (IRS) has implemented since the 2019 show in New Orleans. Last year’s Clean Show was canceled due to the COVID-19 pandemic.

Few will be surprised that since then the tax rules have changed. There are new write-offs strictly for those attending remote events, seminars and the like. A new, temporary 100% write-off for some food-and-beverage costs, new per diem rates and a recently increased standard mileage rate are a few of the revised rules that those in the linen, uniform and facility services industry face today.

For starters, consider deductions for attending trade shows and other business-related travel. Generally, a linen, uniform and facility services business or supplier partner can deduct expenses incurred when traveling on business. You must meet the basic threshold of “ordinary and necessary” business expenses, and if the trip is completely business-related, the full amount is deductible for expenses, including:

• Travel by plane, car, bus or train between the attendee’s home and the destination
• Transportation at the destination, including from the airport to the hotel, the hotel to the event and even the cost of a car rental
• Actual or standard mileage costs of using a personal or business vehicle for the trip
• Parking, tolls and other costs associated with the use of the vehicle
• Lodging
• Meals, either the actual cost or the IRS’s per-diem allowance
• Dry-cleaning or laundry services
• Tips related to any of the above.

Currently, and until at least 2026, you cannot treat employee business-expense deductions as personal itemized deductions. However, linen, uniform and facility services businesses, along with supplier partners, can continue to reap tax savings for attending events in-person or remotely.

A business can deduct expenses, including travel, lodging and meals for owners and employees attending a convention or trade show in the U.S. – provided that they can show that their attendance benefited the business. This applies to workshops, conferences and seminars, as well as trade shows and conventions.

However, although travel fees are among the most common business-expense deductions, this type of expense can also be one of the most confusing. Fortunately, things can go a lot smoother with the IRS’s standard-expense deduction.

Business travel generally entails an array of expenses. In addition to the cost of getting to and from the event destination, there is paying for a place to stay, local transportation, meals and entertainment, and more. All this can make it difficult to discern the numbers of deductions that are possible. The IRS’s per-diem rules greatly simplify the process of substantiating business-travel expense amounts.

Originally designed for federal employees, the per diem is a daily allowance for specific travel expenses used by private employers and accepted by the IRS. While the per-diem amount does not cover transportation to out-of-town events or other business destinations, it does cover lodging, along with meals and incidentals once an attendee arrives at the event.

Updated annually, the per-diem rates change as costs rise. The per-diem rates include three components:

• Meals and incidental expenses (M&IE) “high/low” rates are $295 for travel to any high-cost locality and $202 for travel to any other locality in the continental U.S. In any other locality, the amount of the high rate paid for meals is 74% or $64.
• Incidental expenses only cover such things as fees, tips and the like and remain at $5 per day.
• High-cost cities and locations cover the cost when business requires visiting a more-expensive destination.

To learn more, including updates on the latest deductibility rules for attending virtual and international events, check out pg. 30 of May’s Textile Services, for the article titled, “Writing Off Show Attendance Here and There.” It could help you save money, while ensuring compliance with IRS rules associated with attending business functions, including this year’s Clean Show in Atlanta from July 30-Aug. 2.