The IRS has provided the 2015-2016 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, IRB 2011-42, 520.
Transportation industry rates
The special M&IE rates for taxpayers in the transportation industry are $63 for any locality of travel in the continental United States (CONUS) and $68 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 $275 for travel to any high-cost locality and $185 for travel to any other locality within CONUS. The amount of the $275 high rate and $185 low rate that is treated as paid for meals is $68 for travel to any high-cost locality and $57 for travel to any other locality within CONUS. The per diem rates in lieu of the M&IE only substantiation method are $68 for travel to any high-cost locality and $57 for travel to any other locality within CONUS.
High-cost localities changes
The following localities have been added to the list of high-cost localities: Mammoth Lakes, California; Grand Lake, Colorado; Silverthorne/Breckenridge, Colorado; Traverse City/Leland, Michigan; Hershey, Pennsylvania; Wallops Island, Virginia.
The following localities have changed the portion of the year in which they are high-cost localities: Napa, California; Telluride, Colorado; Miami, Florida; Martha’s Vineyard, Massachusetts; Nantucket, Massachusetts; Jamestown/Middletown/Newport, Rhode Island; Charleston, South Carolina; Jackson/Pinedale, Wyoming.
The following localities have been removed from the list of high-cost localities: Sedona, Arizona; Santa Cruz, California; New Orleans, Louisiana; Baltimore City, Maryland; Cambridge/St. Michaels, Maryland; Glendive/Sidney, Montana; Conway, New Hampshire; Glens Falls, New York; Tarrytown/White Plains/New Rochelle, New York; Kill Devil, North Carolina; Williston, North Carolina.
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, 2015, for travel away from home on or after October 1, 2015. 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, 2015. Notice 2014-57, IRB 2014-42, 723, is superceded. (IRS Notice 2015-63, September 16, 2015.)
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