The IRS has provided the 2014-2015 special per diem rates for taxpayers to use to substantiate ordinary and necessary business expenses incurred while traveling away from home. The guidance provides the special transportation industry meal and incidental expenses (M&IE) rates, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method. Taxpayers using the rates and list of high-cost localities provided must comply with Rev. Proc. 2011-47, I.R.B. 2011-42, 520.
Transportation industry rates
The special M&IE rates for taxpayers in the transportation industry are $59 for any locality of travel in the continental United States (CONUS) and $65 for any locality of travel outside the continental United States (OCONUS).
Incidental expense only rate
The rate for any CONUS or OCONUS locality of travel for the incidental expenses only deduction is $5 per day.
High-low substantiation method
For purposes of the high-low substantiation method, the per diem rates are $259 for travel to any high-cost locality and $172 for travel to any other locality within CONUS. The amount of the $259 high rate and $172 low rate that is treated as paid for meals is $65 for travel to any high-cost locality and $52 for travel to any other locality within CONUS. The per diem rates in lieu of the M&IE only substantiation method are $65 for travel to any high-cost locality and $52 for travel to any other locality within CONUS.
High-cost localities changes
San Mateo, Foster City, Belmont, Sunnyvale, Palo Alto and San Jose, California; Glendive and Sidney, Montana; and Williston, North Dakota, have been added to the list of high-cost localities appearing in Notice 2013-65, I.R.B. 2013-44, 440. The portion of the year in which they are high-cost localities has changed for Sedona, Arizona; Napa, California; Vail, Colorado; Fort Lauderdale, Florida; Miami, Florida; Philadelphia, Pennsylvania. The following localities have been removed from the list of high-cost localities: Yosemite National Park, California; San Diego, California; and Floral Park, Garden City and Great Neck, New York.
The guidance is effective for per diem allowances for lodging, meal and incidental expenses, or for M&IE only, that are paid to any employee on or after October 1, 2014, for travel away from home on or after October 1, 2014. For purposes of computing the amount allowable as a deduction for travel away from home, the guidance is effective for M&IE or for incidental expenses only paid or incurred on or after October 1, 2014. Notice 2013-65, IRB 2013-44, 440, is superceded. (IRS Notice 2014-57, IRB 2014-41, October 6, 2014.)
For more information on this and other topics, consult the Visit our News Library.