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IRS Publishes Special Per Diem Business, Travel Expense Substantiation Rates for 2012-2013

SEP. 26, 2012

Notice 2012-63; 2012-42 I.R.B. 496

DATED SEP. 26, 2012
DOCUMENT ATTRIBUTES
Citations: Notice 2012-63; 2012-42 I.R.B. 496
2012-2013 Special Per Diem Rates

Superseded by Notice 2013-65 Supersedes Notice 2011-81;

SECTION 1. PURPOSE

This annual notice provides the 2012-2013 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home, specifically (1) the special transportation industry meal and incidental expenses (M&IE) rates, (2) the rate for the incidental expenses only deduction, and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.

SECTION 2. BACKGROUND

Rev. Proc. 2011-47, 2011-42 I.R.B. 520, provides rules for using a per diem rate to substantiate, under § 274(d) of the Internal Revenue Code and § 1.274-5 of the Income Tax Regulations, the amount of ordinary and necessary business expenses paid or incurred while traveling away from home. Taxpayers using the rates and list of high-cost localities provided in this notice must comply with Rev. Proc. 2011-47. Notice 2011-81, 2011-42 I.R.B. 513, provides the rates and list of high-cost localities for the period October 1, 2011, to September 30, 2012.

Section 3.02(3) of Rev. Proc. 2011-47 provides that the term "incidental expenses" has the same meaning as in the Federal Travel Regulations, 41 C.F.R. 300-3.1, and that future changes to the definition of incidental expenses in the Federal Travel Regulations would be announced in the annual per diem notice. On September 7, 2011, the General Services Administration published interim (temporary) regulations revising the definition of incidental expenses under the Federal Travel Regulations to include only fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Transportation between places of lodging or business and places where meals are taken, and the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings, are no longer included in incidental expenses. Accordingly, taxpayers using per diem rates may separately deduct or be reimbursed for transportation and mailing expenses.

SECTION 3. SPECIAL M&IE RATES FOR TRANSPORTATION INDUSTRY

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). See section 4.04 of Rev. Proc. 2011-47.

SECTION 4. RATE FOR INCIDENTAL EXPENSES ONLY DEDUCTION

The rate for any CONUS or OCONUS locality of travel for the incidental expenses only deduction is $5 per day. See section 4.05 of Rev. Proc. 2011-47.

SECTION 5. HIGH-LOW SUBSTANTIATION METHOD

1. Annual high-low rates. For purposes of the high-low substantiation method, the per diem rates in lieu of the rates described in section 4.01 of Rev. Proc. 2011-47 (the per diem substantiation method) are $242 for travel to any high-cost locality and $163 for travel to any other locality within CONUS. The amount of the $242 high rate and $163 low rate that is treated as paid for meals for purposes of § 274(n) is $65 for travel to any high-cost locality and $52 for travel to any other locality within CONUS. See section 5.02 of Rev. Proc. 2011-47. The per diem rates in lieu of the rates described in section 4.02 of Rev. Proc. 2011-47 (the meal and incidental expenses only substantiation method) are $65 for travel to any high-cost locality and $52 for travel to any other locality within CONUS.

2. High-cost localities. The following localities have a federal per diem rate of $202 or more, and are high-cost localities for all of the calendar year or the portion of the calendar year specified in parentheses under the key city name.

      Key city                       County or other defined location

 

 _____________________________________________________________________

 

 

 Arizona

 

 

      Sedona                              City limits of Sedona

 

      (March 1 - April 30)

 

 

 California

 

 

      Monterey                            Monterey

 

 

      Napa                                Napa

 

      (October 1 - November 30 and

 

      April 1 - September 30)

 

 

      San Diego                           San Diego

 

 

      San Francisco                       San Francisco

 

 

      Santa Barbara                       Santa Barbara

 

 

      Santa Monica                        City limits of Santa Monica

 

 

      Yosemite National Park              Mariposa

 

      (June 1 - August 31)

 

 

 Colorado

 

 

      Aspen                               Pitkin

 

      (December 1 - March 31 and

 

      June 1 - August 31)

 

 

      Denver/Aurora                       Denver, Adams, Arapahoe, and

 

                                          Jefferson

 

 

      Steamboat Springs                   Routt

 

      (December 1 - March 31)

 

 

      Telluride                           San Miguel

 

      (December 1 - March 31)

 

 

      Vail                                Eagle

 

      (December 1 - August 31)

 

 

 District of Columbia

 

 

      Washington D.C. (also the

 

      cities of Alexandria, Falls

 

      Church, and Fairfax, and

 

      the counties of Arlington

 

      and Fairfax, in Virginia;

 

      and the counties of

 

      Montgomery and Prince

 

      George's in Maryland)

 

      (See also Maryland and

 

      Virginia)

 

 

 Florida

 

 

      Fort Lauderdale                     Broward

 

      (January 1 - May 31)

 

 

      Fort Walton Beach/De Funiak         Okaloosa and Walton

 

      Springs

 

      (June 1 - July 31)

 

 

      Key West                            Monroe

 

 

      Miami                               Miami-Dade

 

      (December 1 - March 31)

 

 

      Naples                              Collier

 

      (January 1 - April 30)

 

 

 Illinois

 

 

      Chicago                             Cook and Lake

 

 

      (October 1 - November 30 and

 

      April 1 - September 30)

 

 

 Louisiana

 

 

      New Orleans                         Orleans, St. Bernard,

 

      (October 1 - June 30)               Jefferson and Plaquemine

 

                                          Parishes

 

 Maine

 

 

      Bar Harbor                          Hancock

 

      (July 1 - August 31)

 

 

 Maryland

 

 

      Baltimore City                      Baltimore City

 

      (October 1 - November 30

 

      and March 1 - September 30)

 

 

      Cambridge/St. Michaels              Dorchester and Talbot

 

      (June 1 - August 31)

 

 

      Ocean City                          Worcester

 

      (June 1 - August 31)

 

 

      Washington, DC Metro Area           Montgomery and Prince

 

                                          George's

 

 

 Massachusetts

 

 

      Boston/Cambridge                    Suffolk, City of Cambridge

 

 

      Falmouth                            City limits of Falmouth

 

      (July 1 - August 31)

 

 

      Martha's Vineyard                   Dukes

 

      (July 1 - August 31)

 

 

      Nantucket                           Nantucket

 

      (June 1 - September 30)

 

 

 New Hampshire

 

 

      Conway                              Carroll

 

      (July 1 - August 31)

 

 

 New York

 

 

      Floral Park/Garden City/            Nassau

 

      Great Neck

 

 

      Glens Falls                         Warren

 

      (July 1 - August 31)

 

 

      Lake Placid                         Essex

 

      (July 1 - August 31)

 

 

      Manhattan (includes the             Bronx, Kings, New York,

 

      boroughs of Queens,                 Richmond

 

      Manhattan, Brooklyn, the

 

      Bronx, Queens and Staten

 

      Island)

 

 

      Saratoga Springs/Schenectady        Saratoga and Schenectady

 

      (July 1 - August 31)

 

 

      Tarrytown/White Plains/New          Westchester

 

      Rochelle

 

 

 North Carolina

 

 

      Kill Devil                          Dare

 

      (June 1 - August 31)

 

 

 Pennsylvania

 

 

      Philadelphia                        Philadelphia

 

 

 Rhode Island

 

 

      Jamestown/Middletown/Newport        Newport

 

      (October 1 - October 31 and

 

      May 1 - September 30)

 

 

 Utah

 

 

      Park City                           Summit

 

      (January 1 - March 31)

 

 

 Virginia

 

 

      Washington, DC Metro Area           Cities of Alexandria,

 

                                          Fairfax, and Falls Church;

 

                                          counties of Arlington and

 

                                          Fairfax

 

 

      Virginia Beach                      City of Virginia Beach

 

      (June 1 - August 31)

 

 

 Washington

 

 

      Seattle                             King

 

 

 Wyoming                                  Teton and Sublette

 

 

      Jackson/Pinedale

 

      (July 1 - August 31)

 

 

3. Changes in high-cost localities. There are no changes in the list of high-cost localities in this notice from the list of high-cost localities in section 5 of Notice 2011-81.

SECTION 6. EFFECTIVE DATE

This notice is effective for per diem allowances for lodging, meal and incidental expenses, or for meal and incidental expenses only, that are paid to any employee on or after October 1, 2012, for travel away from home on or after October 1, 2012. For purposes of computing the amount allowable as a deduction for travel away from home, this notice is effective for meal and incidental expenses or for incidental expenses only paid or incurred on or after October 1, 2012. See sections 4.06 and 5.04 of Rev. Proc. 2011-47 for transition rules for the last 3 months of calendar year 2012.

SECTION 7. EFFECT ON OTHER DOCUMENTS

Notice 2011-81 is superseded.

DRAFTING INFORMATION

The principal author of this notice is Eric D. Brauer of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact Mr. Brauer at (202) 622-4970 (not a toll-free call).

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