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IRS Publishes Special Per Diem Rates for 2014-2015

SEP. 19, 2014

Notice 2014-57; 2014-42 IRB 723

DATED SEP. 19, 2014
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Citations: Notice 2014-57; 2014-42 IRB 723

SECTION 1. PURPOSE

This annual notice provides the 2014-2015 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 2013-65, 2013-42 I.R.B. 440, provides the rates and list of high-cost localities for the period October 1, 2013, to September 30, 2014.

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 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 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 2013-65 (the per diem substantiation method) are $259 for travel to any high-cost locality and $172 for travel to any other locality within CONUS. The amount of the $259 high rate and $172 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 2013-65 (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 $216 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-May 31)

 

 

 California

 

 

      Monterey                           Monterey

 

      (July 1-August 31)

 

 

      Napa                               Napa

 

      (October 1-November 30 and

 

      February 1-September 30)

 

 

      San Francisco                      San Francisco

 

 

      San Mateo/Foster City/Belmont      San Mateo

 

 

      Santa Barbara                      Santa Barbara

 

 

      Santa Cruz                         Santa Cruz

 

      (June 1-August 31)

 

 

      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, 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-March 31 and

 

      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)

 

 

 Florida

 

 

      Boca Raton/Delray Beach/Jupiter    Palm Beach and Hendry

 

      (January 1-April 30)

 

 

      Fort Lauderdale                    Broward

 

      (January 1-March 31)

 

 

      Fort Walton Beach/De Funiak        Okaloosa and Walton

 

      Springs

 

      (June 1-July 31)

 

 

      Key West                           Monroe

 

 

      Miami                              Miami-Dade

 

      (October 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

 

      (October 1-June 30)                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)

 

 

 Montana

 

 

      Glendive/Sidney                    Dawson and Richland

 

 

 New Hampshire

 

 

      Conway                             Carroll

 

      (July 1-August 31)

 

 

 New York

 

 

      Glens Falls                        Warren

 

      (July 1-August 31)

 

 

      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)

 

 

      Tarrytown/White Plains/New         Westchester

 

      Rochelle

 

 

 North Carolina

 

 

      Kill Devil                         Dare

 

      (June 1-August 31)

 

 

 North Dakota

 

 

      Williston                          Williams, Mountrail, and McKenzie

 

 

 Pennsylvania

 

 

      Philadelphia                       Philadelphia

 

      (October 1-November 30 and

 

      March 1-June 30 and

 

      September 1-September 30)

 

 

 Rhode Island

 

 

      Jamestown/Middletown/Newport       Newport

 

      (October 1-October 31 and

 

      May 1-September 30)

 

 

 South Carolina

 

 

      Charleston                         Charleston, Berkeley and Dorchester

 

      (March 1-May 31)

 

 

 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

 

 

      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 2013-65.

 

a. The following localities have been added to the list of high-cost localities: San Mateo/Foster City/Belmont, California; Sunnyvale/Palo Alto/San Jose, California; Glendive/Sidney, Montana; Williston, North Dakota.

b. The following localities have changed the portion of the year in which they are high-cost localities: Sedona, Arizona; Napa, California; Vail, Colorado; Fort Lauderdale, Florida; Miami, Florida; Philadelphia, Pennsylvania.

c. The following localities have been removed from the list of high-cost localities: Yosemite National Park, California; San Diego, California; Floral Park/Garden City/Great Neck, New York.

 

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, 2014, for travel away from home on or after October 1, 2014. 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, 2014. See sections 4.06 and 5.04 of Rev. Proc. 2011-47 for transition rules for the last 3 months of calendar year 2014.

SECTION 7. EFFECT ON OTHER DOCUMENTS

Notice 2013-65 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) 317-7007 (not a toll-free call).

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