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Phyllis Harden

Legislative & Special Projects, Pine Bluff Sand & Gravel
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Temporary Work Assignments

Extend the Time Limit for Temporary Work Assignments in Construction

Background:

  • The IRS “temporary work assignment” definition for construction is 12 months and the construction industry commonly requires its employees to travel to out of town job sites. In recent years construction contracts have become increasingly larger and complex.

AGC Message:

  • Extend “Temporary Work Assignment” Definition to 24 Months. AGC supports increasing the “temporary work assignment” IRS definition for construction workers from the present limitation of 12 months to a new limitation of 24 months. Many jobs now require more than 12 months but less than 24 months to complete.
  • Construction Has A Mobile Workforce. The extension of the temporary assignment period from 12 months to 24 months merely recognizes the mobile nature of the construction work force, the modern complexity and size of contracts, as well as reasonable delays outside the control of the contractor. For example, a highway construction contract in Florida that can be completed in 12 months may require up to 24 months to complete in Alaska due to weather and other on-site delays.
  • Reimbursement and Necessary Living Expenses Are Not Subject to Taxation. Ordinary and necessary living expenses paid on behalf of or reimbursed to an employee when working away from home on temporary assignments are not subject to taxation to the employee and are deductible business expenses. Existing tax law requires reimbursements to employees be treated as additional compensation when the work assignment time becomes expected to exceed 12 months. Typically, the employer “grosses up” (includes in gross income) the reimbursement so that the employee is receiving a tax neutral benefit to the expense of the employer and the contracting customer. This gross-up effectively doubles the cost of the employee to the employer.
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