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IRS Publishes Special Per Diem Business, Travel Expense Substantiation Rates for 2013-2014

SEP. 25, 2013

Notice 2013-65; 2013-44 IRB 440

DATED SEP. 25, 2013
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Citations: Notice 2013-65; 2013-44 IRB 440

SECTION 1. PURPOSE

This annual notice provides the 2013-2014 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 2012-63, 2012-42 I.R.B. 496, provides the rates and list of high-cost localities for the period October 1, 2012, to September 30, 2013.

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 October 22, 2012, 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 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 Notice 2012-63 (the per diem substantiation method) are $251 for travel to any high-cost locality and $170 for travel to any other locality within CONUS. The amount of the $251 high rate and $170 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 Notice 2012-63 (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 $210 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

 

   (July 1-August 31)

 

 

  Napa                                                  Napa

 

   (October 1-November 30 and April 1-September 30)

 

 

  San Diego                                             San Diego

 

 

  San Francisco San                                     Francisco

 

 

  Santa Barbara                                         Santa Barbara

 

 

  Santa Cruz                                            Santa Cruz

 

   (June 1-August 31)

 

 

  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,

 

                                                        Arapachoe, and

 

                                                        Jefferson

 

 

  Steamboat Springs                                     Routt

 

   (December 1-March 31)

 

 

  Telluride                                             San Miguel

 

   (December 1-March 31 and June 1-September 30)

 

 

  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/Hendry

 

   (January 1-April 30)

 

 

  Fort Lauderdale                                       Broward

 

   (January 1-May 31)

 

 

  Fort Walton Beach/De Funiak Springs                   Okaloosa and Walton

 

   (June 1-July 31)

 

 

  Key West Monroe

 

 

  Miami Miami-Dade

 

   (January 1-March 31)

 

 

  Naples Collier

 

   (January 1-April 30)

 

 

 Illinois

 

  Chicago                                               Cook and Lake

 

   (October 1-November 30 and March 1-September 30)

 

 

 Louisiana

 

  New Orleans                                           Orleans, St. Bernard,

 

                                                        Jefferson and

 

                                                        Plaquemine Parishes

 

   (October 1-June 30)

 

 

 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/Great Neck                    Nassau

 

  Glens Falls                                           Warren

 

   (July 1-August 31)

 

 

  Lake Placid                                           Essex

 

   (July 1-August 31)

 

 

  Manhattan (includes the boroughs of                   Bronx, Kings, New York,

 

  Manhattan, Brooklyn, the Bronx,                       Queens, Richmond

 

  Queens and Staten Island)

 

 

  Saratoga Springs/Schenectady                          Saratoga and

 

   (July 1-August 31)                                   Schenectady

 

 

  Tarrytown/White Plains/New Rochelle                   Westchester

 

 

 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)

 

 

 South Carolina

 

  Charleston                                            Charleston, Berkeley

 

   (March 1-May 31)                                     and Dorchester

 

 

 Texas

 

  Midland                                               Midland

 

 

 Utah

 

  Park City                                             Summit

 

   (December 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. The list of high-cost localities in this notice differs from the list of high-cost localities in section 5 of Notice 2012-63.

 

a. The following localities have been added to the list of high-cost localities: Santa Cruz, California; Boca Raton/Delray Beach/Jupiter, Florida; Charleston, South Carolina; and Midland, Texas.

b. The following localities have changed the portion of the year in which they are high-cost localities: Monterey, California; Telluride, Colorado; Miami, Florida; Chicago, Illinois; and Park City, Utah.

c. No localities have been removed from the list of high-cost localities.

 

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, 2013, for travel away from home on or after October 1, 2013. 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, 2013. See sections 4.06 and 5.04 of Rev. Proc. 2011-47 for transition rules for the last 3 months of calendar year 2013.

SECTION 7. EFFECT ON OTHER DOCUMENTS

Notice 2012-63 is superseded.

DRAFTING INFORMATION

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

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