IRS List

• The IRS publishes an MCC list to make reportable income easier for employers. The list has codes for any service the IRS deems reportable as income, depending on your accounting method - accountable or unaccountable. If your travel expenses are paid to a company that is in an industry represented by this code, you can be assured that it is taxable income and can safely add that amount to the appropriate form. You are not required to use the codes.
  
  

Visa

• Visa publishes the complete list of MCC categories and includes both service and merchandise industries. Travel is considered a service, so it also appears on the IRS list with the same code. Travel services are broken down into airlines and air carriers, airports and flying fields, travel agencies and tour operators, tolls and bridge fees, boat rentals and leases, transportation services not classified elsewhere, railroads, parking lots and garages and other transportation, such as cruise lines, that could be personal or business.
  
  

Code Assignment

• When a vendor first begins accepting bankcards, the acquiring bank assigns the merchant an MCC based on his primary business. For example, if you must travel by boat, and the company with whom you make the reservation also sells boats, he could be classified as Boat Rental or Boat Dealer, whichever is his primary business. The vendor should know the commodity code to which he's been assigned, so if you need the correct code for tax purposes you can determine if it is correct and adjust accordingly. A boat dealer sells merchandise and would not appear on the IRS taxable MCC list. The vendor's MCC is included in your Visa Information Management 1099 reports and is also given to your bank. This should be included in your bank's reports to you.
  
  

Incorrectly Classified

• Occasionally you may find a vendor that performs a service but is not listed on the IRS MCC list as a taxable expense. Do not report it even if you think it's wrong. However, if you see a code assigned to a vendor that is obviously wrong, for example he's listed as travel agency but really sells hardware, report this vendor to the card issuer, such as Visa, so it may correctly classify the vendor.