Tax Notes logo

IRS Publishes Special Per Diem Rates for 2016-17

SEP. 27, 2016

Notice 2016-58; 2016-41 I.R.B. 438

DATED SEP. 27, 2016
DOCUMENT ATTRIBUTES
Citations: Notice 2016-58; 2016-41 I.R.B. 438
2016-2017 Special Per Diem Rates

Superseded by Notice 2017-54

Supersedes Notice 2015-63

SECTION 1. PURPOSE

This annual notice provides the 2016-2017 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 2015-63, 2015-42 I.R.B. 723, provides the rates and list of high-cost localities for the period October 1, 2015, to September 30, 2016.

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. Subsequent to the publication of Rev. Proc. 2011-47, the General Services Administration published final 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 the 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 $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). 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 Notice 2015-63 (the per diem substantiation method) are $282 for travel to any high-cost locality and $189 for travel to any other locality within CONUS. The amount of the $282 high rate and $189 low rate that is treated as paid for meals for purposes of § 274(n) is $68 for travel to any high-cost locality and $57 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 Notice 2015-63 (the meal and incidental expenses only substantiation method) are $68 for travel to any high-cost locality and $57 for travel to any other locality within CONUS.

2. High-cost localities. The following localities have a federal per diem rate of $236 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.

                                                  County or other

 

 Key city                                         defined location

 

 ______________________________________________________________________

 

 

 Arizona

 

 

      Sedona                                  City Limits of Sedona

 

      (March 1-April 30)

 

 

 California

 

 

      Los Angeles                             Los Angeles, Orange,

 

      (January 1-March 31)                    Ventura, Edwards AFB less

 

                                              the city of Santa Monica

 

 

      Mill Valley/San Rafael/Novato           Marin

 

      (October 1-October 31 and

 

      June 1-September 30)

 

 

      Monterey                                Monterey

 

      (July 1-August 31)

 

 

      Napa                                    Napa

 

      (October 1-October 31 and

 

      May 1-September 30)

 

 

      San Francisco                           San Francisco

 

 

      San Mateo/Foster City/Belmont           San Mateo

 

 

      Santa Barbara                           Santa Barbara

 

 

      Santa Monica                            City limits of Santa

 

                                              Monica

 

 

      Sunnyvale/Palo Alto/San Jose            Santa Clara

 

 

 Colorado

 

 

      Aspen                                   Pitkin

 

      (December 1-March 31 and

 

      June 1-August 31)

 

 

      Denver/Aurora                           Denver, Adams, Arapahoe,

 

      (October 1-November 30 and              and Jefferson

 

      February 1-September 30)

 

 

      Grand Lake                              Grand

 

      (December 1-March 31)

 

 

      Silverthorne/Breckenridge               Summit

 

      (December 1-March 31)

 

 

      Steamboat Springs                       Routt

 

      (December 1-March 31)

 

 

      Telluride                               San Miguel

 

      (December 1-March 31 and

 

      June 1-August 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

 

 

      Boca Raton/Delray Beach/Jupiter         Palm Beach and Hendry

 

      (January 1-April 30)

 

 

      Fort Lauderdale                         Broward

 

      (January 1-April 30)

 

 

      Fort Walton Beach/De Funiak Springs     Okaloosa and Walton

 

      (June 1-July 31)

 

 

      Key West                                Monroe

 

 

      Miami                                   Miami-Dade

 

      (December 1-March 31)

 

 

      Naples                                  Collier

 

      (December 1-April 30)

 

 

      Vero Beach                              Indian River

 

      (December 1-April 30)

 

 

 Illinois

 

 

      Chicago                                 Cook and Lake

 

      (October 1-November 30 and

 

      April 1-September 30)

 

 

 Maine

 

 

      Bar Harbor                              Hancock

 

      (July 1-August 31)

 

 

 Maryland

 

 

      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

 

      (June 1-September 30)

 

 

      Nantucket                               Nantucket

 

      (October 1-December 31 and

 

      June 1-September 30)

 

 

 Michigan

 

 

      Traverse City/Leland                    Grand Traverse and

 

      (July 1-August 31)                      Leelanau

 

 

 New York

 

 

      Lake Placid                             Essex

 

      (July 1-August 31)

 

 

      New York City                           Bronx, Kings, New York,

 

                                              Queens, and Richmond

 

 

      Saratoga Springs/Schenectady            Saratoga and Schenectady

 

      (July 1-August 31)

 

 

 North Carolina

 

 

      Kill Devil                              Dare

 

      (June 1-August 31)

 

 

 Oregon

 

 

      Seaside                                 Clatsop

 

      (July 1-August 31)

 

 

 Pennsylvania

 

 

      Hershey                                 Hershey

 

      (June 1-August 31)

 

 

      Philadelphia                            Philadelphia

 

      (October 1-November 30,

 

      April 1-June 30, and

 

      September 1-September 30)

 

 

 Rhode Island

 

 

      Jamestown/Middletown/Newport            Newport

 

      (July 1-August 31)

 

 

 South Carolina

 

 

      Charleston                              Charleston, Berkeley and

 

      (October 1-November 30 and              Dorchester

 

      March 1-September 30)

 

 

 Utah

 

 

      Park City                               Summit

 

      (December 1-March 31)

 

 

 Virginia

 

 

      Virginia Beach                          City of Virginia Beach

 

      (June 1-August 31)

 

 

      Wallops Island                          Accomack

 

      (July 1-August 31)

 

 

      Washington, DC Metro Area               Cities of Alexandria,

 

                                              Fairfax, and Falls

 

                                              Church; counties of

 

                                              Arlington and Fairfax

 

 

 Washington

 

 

      Seattle                                 King

 

 

 Wyoming

 

 

      Jackson/Pinedale                        Teton and Sublette

 

      (July 1-August 31)

 

 

3. Changes in high-cost localities. The list of high-cost localities in this notice differs from the list of high-cost localities in section 5 of Notice 2015-63.

 

a. The following localities have been added to the list of high-cost localities: Sedona, AZ; Los Angeles, California; Mill Valley/San Rafael/Novato, California; Vero Beach, Florida; Kill Devil, North Carolina; Seaside, Oregon.

b. The following localities have changed the portion of the year in which they are high-cost localities: Denver/Aurora, Colorado; Vail, Colorado; Fort Lauderdale, Florida; Naples, Florida; Chicago, Illinois; Philadelphia, Pennsylvania; Jamestown/Middletown/Newport, Rhode Island; Jackson/Pinedale, Wyoming.

c. The following localities have been removed from the list of high-cost localities: Mammoth Lakes, California; Midland, Texas.

 

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, 2016, for travel away from home on or after October 1, 2016. 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, 2016. See sections 4.06 and 5.04 of Rev. Proc. 2011-47 for transition rules for the last 3 months of calendar year 2016.

SECTION 7. EFFECT ON OTHER DOCUMENTS

Notice 2015-63 is superseded.

DRAFTING INFORMATION

The principal author of this notice is Elizabeth Binder of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact Elizabeth Binder at (202) 317-7005 (not a toll-free call).

DOCUMENT ATTRIBUTES
Copy RID