The IRS today released an advance copy of Notice 2015-63 as the annual notice providing the 2015-2016 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home.
Notice 2015-63 [PDF 25 KB] provides:
The IRS historically issued revenue procedures as an annual update of the rules for determining when the amount of ordinary and necessary business expenses of an employee for lodging, meal, and incidental expenses incurred while traveling away from home were deemed substantiated under Reg. section 1.274-5 when a per diem allowance under a reimbursement or other expense allowance arrangement was provided.
The annual revenue procedure also provided an optional method for employees and self-employed individuals who were not reimbursed to use in computing the deductible costs paid or incurred for business meals and incidental expenses while traveling away from home.
In 2011, the IRS announced that it intended to discontinue the high-low substantiation method. In response to comments from a number of taxpayers that they in fact used the high-low substantiation method. Thus, the IRS issued Rev. Proc. 2011-47 stating that it would publish an annual notice that provides the special per diem rates (with the list of high-cost localities to be updated only as necessary). Rev. Proc. 2011-47 also provides the rules for using a per diem rate to substantiate the amount of ordinary and necessary business expenses paid or incurred while traveling away from home.
With today’s release, Notice 2015-63 states that taxpayers using the rates and list of high-costs localities must comply with Rev. Proc. 2011-47.
Today’s notice also states that the rates and list of high-cost localities for the period October 1, 2014, to September 30, 2015, is included in last year’s annual notice, Notice 2014-57 [PDF 27 KB].
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.