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IRS Publishes Special Per Diem Rates for 2020-2021

SEP. 11, 2020

Notice 2020-71; 2020-40 IRB 1

DATED SEP. 11, 2020

DOCUMENT ATTRIBUTES

Institutional Authors
Internal Revenue Service
Code Sections
Section 274
Section 162
Section 62
Subject Areas/Tax Topics
Corporate taxation
Employment taxes
Exemptions and deductions
Individual income taxation
Tax system administration
Jurisdictions
United States
Tax Analysts Document Number
2020-35398
Tax Analysts Electronic Citation
2020 TNTF 177-25
2020 TPR 38-10

Citations: Notice 2020-71; 2020-40 IRB 1

Modified and Superseded by Notice 2021-52

Supersedes Notice 2019-55

2020-2021 Special Per Diem Rates

SECTION 1. PURPOSE

This annual notice provides the 2020-2021 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. 2019-48, 2019-51 I.R.B. 1392 (or successor), 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. 2019-48 (or successor). Notice 2019-55, 2019-42 I.R.B. 937, provides the rates and list of high-cost localities for the period October 1, 2019, to September 30, 2020.

SECTION 3. SPECIAL M&IE RATES FOR TRANSPORTATION INDUSTRY

The special M&IE rates for taxpayers in the transportation industry are $66 for any locality of travel in the continental United States (CONUS) and $71 for any locality of travel outside the continental United States (OCONUS). See section 4.04 of Rev. Proc. 2019-48 (or successor).

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. 2019-48 (or successor).

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 2019-55 (the per diem substantiation method) are $292 for travel to any high-cost locality and $198 for travel to any other locality within CONUS. The amount of the $292 high rate and $198 low rate that is treated as paid for meals for purposes of § 274(n) is $71 for travel to any high-cost locality and $60 for travel to any other locality within CONUS. See section 5.02 of Rev. Proc. 2019-48 (or successor). The per diem rates in lieu of the rates described in Notice 2019-55 (the meal and incidental expenses only substantiation method) are $71 for travel to any high-cost locality and $60 for travel to any other locality within CONUS.

2. High-cost localities. The following localities have a federal per diem rate of $245 or more, and are high-cost localities for the specified portion of the calendar year.

Key City	County or Other Defined Location	Portion of Calendar Year
Arizona
Sedona	City Limits of Sedona	October 1 - December 1, March 1 - April 30, and September 1 - September 30
California
Los Angeles	Los Angeles, Orange, Ventura, Edwards AFB less the city of Santa Monica	October 1 - October 31 and January 1 - September 30
Mill Valley/San Rafael/Novato	Marin	October 1 - October 31 and June 1 - September 30
Monterey	Monterey	June 1 - August 31
Napa	Napa	October 1 - November 30 and April 1 - September 30
Oakland	Alameda	October 1 - September 30
San Diego	San Diego	February 1 - July 31
San Francisco	San Francisco	October 1 - September 30
San Mateo/Foster City/Belmont	San Mateo	October 1 - September 30
Santa Barbara	Santa Barbara	October 1 - September 30
Santa Monica	City limits of Santa Monica	October 1 - September 30
Sunnyvale/Palo Alto/San Jose	Santa Clara	October 1 - September 30
Colorado
Aspen	Pitkin	October 1 - March 31 and June 1 - September 30
Crested Butte/Gunnison	Gunnison	December 1 - March 31
Denver/Aurora	Denver, Adams, Arapahoe, and Jefferson	October 1 - October 31 and April 1 - September 30
Grand Lake	Grand	December 1 - March 31
Silverthorne/Breckenridge	Summit	December 1 - March 31
Telluride	San Miguel	October 1 - September 30
Vail	Eagle	October 1 - September 30
Delaware
Lewes	Sussex	July 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)		October 1 - September 30
Florida
Boca Raton/Delray Beach/Jupiter	Palm Beach and Hendry	December 1 - April 30
Fort Lauderdale	Broward	January 1 - April 30
Fort Meyers	Lee	February 1 - March 31
Fort Walton Beach/De Funiak Springs	Okaloosa and Walton	June 1 - July 31
Gulf Breeze	Santa Rosa	June 1 - July 31
Key West	Monroe	October 1 - July 31
Miami	Miami-Dade	December 1 - March 31
Naples	Collier	December 1 - April 30
Vero Beach	Indian River	December 1 - April 30
Georgia
Jekyll Island/ Brunswick	Glynn	March 1 - July 31
Illinois
Chicago	Cook and Lake	October 1 - November 30 and April 1 - September 30
Maine
Bar Harbor/Rockport	Hancock and Knox	July 1 - August 31
Kennebunk/Kittery/ Sanford	York	July 1 - August 31
Maryland
Ocean City	Worcester	July 1 - August 31
Washington, DC Metro Area	Montgomery and Prince George's	October 1 - September 30
Massachusetts
Boston/Cambridge	Suffolk, City of Cambridge	October 1 - September 30
Falmouth	City limits of Falmouth	July 1 - August 31
Hyannis	Barnstable less the city of Falmouth	July 1 - August 31
Martha's Vineyard	Dukes	June 1 - September 30
Nantucket	Nantucket	June 1 - September 30
Michigan
Petoskey	Emmet	July 1 - August 31
Traverse City	Grand Traverse	July 1 - August 31
Montana
Big Sky/West Yellowstone/Gardiner	Gallatin and Park	June 1 - September 30
New Mexico
Carlsbad	Eddy	October 1 - September 30
New York
Lake Placid	Essex	July 1 - August 31
New York City	Bronx, Kings, New York, Queens, and Richmond	October 1 - December 31 and March 1 - September 30
Oregon
Portland	Multnomah	October 1 - October 31 and June 1 - September 30
Seaside	Clatsop	July 1 - August 31
Pennsylvania
Hershey	Hershey	June 1 - August 31
Philadelphia	Philadelphia	October 1 - November 30, March 1 - June 30, and September 1 - September 30
Rhode Island
Jamestown/ Middletown/Newport	Newport	October 1 - October 31 and June 1 - September 30
South Carolina
Charleston	Charleston, Berkeley, and Dorchester	October 1 - November 30 and March 1 - September 30
Tennessee
Nashville	Davidson	October 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	October 1 - September 30
Washington
Seattle	King	October 1 - September 30
Vancouver	Clark, Cowlitz, and Skamania	October 1 - October 31 and June 1 - September 30
Wyoming
Cody	Park	June 1 - September 30
Jackson/Pinedale	Teton and Sublette	June 1 - September 30

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 2019-55.

a. The following localities have been added to the list of high-cost localities: Los Angeles, California; San Diego, California; Gulf Breeze, Florida; Kennebunk/Kittery/Sanford, Maine; Virginia Beach, Virginia.

b. The following localities have changed the portion of the year in which they are high-cost localities: Sedona, Arizona; Monterey, California; Santa Barbara, California; District of Columbia (see also Maryland and Virginia); Naples, Florida; Jekyll Island/Brunswick, Georgia; Boston/Cambridge, Massachusetts; Philadelphia, Pennsylvania; Jamestown/Middletown/Newport, Rhode Island; Charleston, South Carolina.

c. The following localities have been removed from the list of high-cost localities: Midland/Odessa, Texas; Pecos, 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, 2020, for travel away from home on or after October 1, 2020. 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, 2020. See sections 4.06 and 5.04 of Rev. Proc. 2019-48 (or successor) for transition rules for the last 3 months of calendar year 2020.

SECTION 7. EFFECT ON OTHER DOCUMENTS

Notice 2019-55 is superseded.

DRAFTING INFORMATION

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

DOCUMENT ATTRIBUTES

Institutional Authors
Internal Revenue Service
Code Sections
Section 274
Section 162
Section 62
Subject Areas/Tax Topics
Corporate taxation
Employment taxes
Exemptions and deductions
Individual income taxation
Tax system administration
Jurisdictions
United States
Tax Analysts Document Number
2020-35398
Tax Analysts Electronic Citation
2020 TNTF 177-25
2020 TPR 38-10

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