Since I deal with an area of the tax code which is more prone to urban myth and opinions instead of the actual facts, I am providing some citations to show what the IRS really thinks:
The One Year Rule. A temporary assignment cannot be expected to last beyond 12 months (1 year)
These are good cases involving assignments that started as temporary but then extended beyond a year shifting the tax home. Its the income, not the time at home that is the controlling factor: Norwood v Commissioner 66 TC 45 and Saric v Commissioner 79 TCM 1314
Break-in Service Rules: How long to I have to be away to restart the one year clock?
Remember that Corporate compliance is a lower threshold than PERSONAL compliance
30 days is not enough: IRS PLR 200020055 – 1 month break disregarded
Less than 30 days breaks is continuous employment: Reg 31.3402(h)(4)-1 30 day payroll break
7 months is preferred: IRS PLR 200026025 – 7 month break in sevice
12 months is more significant (Look in last Section) Chief Counsel Advisory 200025052 – 12 Months
Distance Rules – Overnight Stay Required to be “Away from Home. There is no “50 mile rule”
This is well established in case history so here are a few: Note: When reading court cases, “Petitioner” refers to the taxpayer and “Respondent” is the IRS.
Governing Document for Per Diem Method of Reimbursement
Wage Recharacterization in Healthcare Staffing and Other Industries
The IRS released this Ruling during the peak of the agency audits in 2012
The Standard by Which The IRS Determines a Tax Home / Residence
The IRS uses Revenue Ruling 73-529 as its primary guideline for determining a taxpayers tax home status which I have linked below. In a nutshell, to have a fixed tax home (vs an itinerant tax home that goes wherever you work) you must maintain a regular job in one area, OR NOT have a place of regular income and duplicate living expenses in the form or rent/mortgage while maintaining a second residence for work.
Per Diems as Treated as Wages
This DOL case shows the problems with low wages where the per diem is treated as a substitute for wages.
State Tax Reporting Thresholds
This is a good reference for employers to settle the confusion over whether an employee is liable for state taxes in a non-resident work state. It is a brief for a bill submitted in 2007 to Congress addressing the temporary workforce. Its a 2007 publication but a good starting point.
A Seasonal Assignment is a Permanent Job
If you work in the same place each year and earn significant income, unless there is income in another location that exceeds the income you earn in this place, the seasonal job is your tax residence
Deductibility of RV Expenses as a 2nd travel residence
Since an RV is generally used as a residence > 14 days, and its virtually impossible to have an exclusive carve out for an office, the acquisition expenses for the RV are not deductible as a business expense (as opposed to the interest and taxes)
Nurses as Independent Contractors
These citations do not mean that it is impossible to be an IC. There are a few agencies that have successfully defended their model.