ST. PAUL, Minn. -- In a ruling hailed as a victory for the country's home child-care providers, the Internal Revenue Service yesterday said providers need not record the specific hours the rooms in their homes are used each day for child care when calculating business deductions.
Advocates said the ruling is a reversal of a previous IRS position that panicked providers and even drove some out of business.
The previous position, which surfaced in the audit of a home child-care provider in White Bear Lake, Minn., implied providers would have to keep records showing how many hours each room of their home was used for day care each day.
"It is significant in that we got it reversed," said Tom Copeland, an expert on taxes and home day care who has written books on the topic. "Child care and children beat the IRS."
Under yesterday's ruling, if a room is available throughout the business day and is regularly used for day care, the square footage of that room will be considered as used for day care for the entire business day.
"It's a simplification of the record-keeping requirements," said Eric Smith, a spokesman for the IRS in St. Paul.
For example, a provider may have a bedroom available for child care throughout the business day for the children's morning and afternoon naps. Even though the bedroom is not used during every hour of the business day, the total square footage of that room is considered as day-care usage for the entire business day.
Copeland said yesterday's ruling gives official sanction to the way day-care providers had been calculating their business deductions all along before the audit of White Bear Lake provider Carol Ploeckelmann.