New per diem rates released for travel expense reimbursements

The IRS has updated the rules for determining the amount of an employee's ordinary and necessary business expenses for lodging, meals, and incidental expenses while traveling away from home that are deemed substantiated under Reg. §1.274-5. The new procedure provides transition rules for the last three months of calendar year 2009 and updates the simplified high-low per diem rates and the high-cost/low-cost localities.

Transition rules

CONUS rates. Taxpayers may continue to use the current CONUS rates in effect for the first nine months of 2009 instead of the updated GSA rates; however, they must consistently use one or the other for the period October 1, 2009, through December 31, 2009.

Meal and incidental expenses. Taxpayers who used the federal meal and incidental expense rates for the first nine months of calendar year 2009 may not use the transportation industry rates provided in the new procedure until January 1, 2010. Conversely, taxpayers who used the transportation industry rates for the first nine months of 2009 cannot use the federal meal and incidental expense rates until January 1, 2010.

Substantiation method. Payers who used the substantiation method for the first nine months of calendar year 2009 may not use the high-low method until January 1, 2010, and vice versa. However, payers using the high-low method may use the rates and high-cost localities contained in Rev. Proc. 2008-59, I.R.B. 2008-41, 857, rather than the updated rates and high-cost localities contained in the new procedure for travel on or after October 1, 2009, and before January 1, 2010.

Per diem rates. The update applies to per diem allowances paid for travel on or after October 1, 2009. The simplified high-low per diem rates have increased to $258 for high-cost localities and to $163 for other localities within CONUS. For purposes of applying the high-low substantiation method and the 50% limitation on meal expenses, the federal meal and incidental expense rate is treated as $65 for a high-cost locality and $45 for any other locality within CONUS.

Locality updates

Monterey, California; Denver/Aurora, Colorado; Bar Harbor, Maine; Conway, New Hampshire; Glens Falls, New York; Lake Placid, New York; and Hershey, Pennsylvania, have been added to the list of high-cost localities.

The portion of the year for which the following are high-cost localities has been changed: Phoenix/Scottsdale, Arizona; Napa, California; San Diego, California: Telluride, Colorado; Vail, Colorado; Miami, Florida; Naples, Florida; Baltimore City, Maryland; Cambridge/St. Michaels, Maryland; Ocean City, Maryland; and Jamestown/Middletown/Newport, Rhode Island.

The following localities have been removed from the list of high-cost localities: Crested Butte/Gunnison, Colorado; Silverthorne/Breckenridge, Colorado; and Palm Beach, Florida.

The following localities have been redefined: Floral Park/Garden City/Great Neck, New York, no longer includes Glen Gove and Roslyn; Tarrytown/White Plains/New Rochelle, New York, no longer includes Yonkers. (Rev. Proc. 2009-47, October 1, 2009.

Reprinted with permission from CCH/Wolterskluwer

You may like these other stories...

School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...
Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.