When it comes to tax deductions, Revenue Ruling 99-7 is one of those pivotal IRS decisions every freelancer, remote worker, and self-employed professional should know. Revenue Ruling 99-7 addresses the deductibility of daily transportation expenses — specifically, whether you can deduct costs incurred when traveling between your residence and various work locations. The ruling outlines when travel is considered a legitimate business expense under Section 162(a) of the Internal Revenue Code, and when it’s treated as nondeductible personal commuting under Section 262. It also introduces clear rules for what qualifies as a temporary work location, helping taxpayers distinguish business travel from routine commuting once and for all.
The Background: When Is a Commute Not a Commute?
Before Revenue Ruling 99-7, there was confusion about when trips between home and work could count as business deductions. Normally, driving from home to work is considered personal commuting — meaning not deductible. But the IRS had issued earlier rulings (like Rev. Rul. 55-109, Rev. Rul. 90-23, and Rev. Rul. 94-47) that allowed deductions in specific cases — for example, if you had multiple job sites or a temporary work location outside your metropolitan area.
Revenue Ruling 99-7 consolidated and clarified those scattered rules into one cohesive framework. It also replaced vague time definitions like “short-term” with a firm one-year rule for determining whether a work site qualifies as temporary.
The Three Deductible Scenarios
According to Revenue Ruling 99-7, there are three main situations in which daily transportation between your residence and another work location is deductible under § 162(a):
- Temporary Work Outside Your Metro Area
You can deduct daily travel expenses if you’re working at a temporary site outside the area where you normally live and work. However, commuting inside your normal area still doesn’t qualify. - Temporary Work in the Same Trade or Business (with Another Regular Worksite)
If you already have a regular work location away from home, you can deduct the cost of traveling between your home and a temporary worksite — even within the same city or region. - Home as Principal Place of Business
If your home qualifies as your principal place of business (under § 280A(c)(1)(A)), you can deduct transportation costs between home and another work location in the same trade or business — regardless of distance.
This final rule is particularly important for self-employed individuals and remote workers, since it acknowledges home offices as legitimate business bases.
The One-Year Rule: Defining “Temporary”
A key highlight of Revenue Ruling 99-7 is its adoption of the one-year standard. Here’s how it works:
- If you realistically expect your assignment at a location to last one year or less, it’s considered temporary.
- If it’s expected to last more than one year, or you have no clear expectation that it will end within a year, it’s not temporary — and travel to that site is treated as nondeductible commuting.
- If your expectation changes midway (say you thought it’d be 9 months but it stretches beyond a year), your deduction stops the moment your expectation changes.
This rule harmonizes IRS guidance across different rulings and ensures consistency with other travel expense provisions (like those for “away-from-home” deductions).
Why It Matters
Revenue Ruling 99-7 is crucial because it finally gives taxpayers clarity on what counts as a business trip versus a personal commute. For freelancers, consultants, and hybrid workers, this means:
- Your home office could save you money if it qualifies as your principal business location.
- Assignments that last under a year might make your commute deductible.
- Employers can use these guidelines to structure reimbursement policies that comply with IRS standards.
It also ensures that deductions are claimed fairly and consistently, avoiding both abuse and missed legitimate write-offs.
Common Examples
- Example 1: You’re a contractor with a home office that meets IRS standards. You drive to a client’s job site 30 miles away. → Deductible.
- Example 2: You work a six-month temporary project outside your metro area. → Deductible.
- Example 3: You go to your regular downtown office every weekday. → Nondeductible commuting.
Final Thoughts
In short, Revenue Ruling 99-7 draws the line between a tax-deductible business journey and ordinary commuting. It empowers independent professionals, remote workers, and business owners to understand when their travel truly qualifies as a business expense. The ruling modernized IRS guidance, synchronized prior rulings, and simplified the “temporary work location” definition — making it one of the most practical rulings for anyone navigating travel deductions.
FAQs
Q1: What is Revenue Ruling 99-7?
It’s an IRS ruling that defines when transportation between your home and work qualifies as a deductible business expense.
Q2: Can I deduct commuting costs if I work from home?
Yes — but only if your home qualifies as your principal place of business under IRS § 280A(c)(1)(A).
Q3: What counts as a temporary work location?
Any work assignment expected to last one year or less is temporary for deduction purposes.
Q4: Are regular commutes ever deductible?
No. Daily drives to your usual office or work site are always nondeductible personal expenses.
Q5: Does this apply to both employees and self-employed people?
Yes, but employees can only claim deductions when the home office is used for the employer’s convenience.
Based on IRS Revenue Ruling 99-7 (1999), Trade or Business Expenses — Deductibility of Daily Transportation Expenses.