What is the best practice for handling taxable vs non taxable per diem within Oracle

Summary:

Our client has a requirement that they provide non taxable per diem and mileage expense reimbursements to their employees. However, if they request a per diem amount that is above the IRS rate this additional amount becomes taxable.

As an employee, they wouldn't necessarily know the difference between a taxable vs non taxable amount but the non taxable amount should be processed through expenses and therefore AP whereas the taxable portion should be taxed and paid through payroll.

How have other clients handled these scenarios and what is Oracle's guidance on leading practice for configuration here?

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