The IRS has issued the simplified per diem rates that taxpayers can use to reimburse employees for expenses incurred during business travel after September 30, 2012 (Notice 2012-63, 2012-42 IRB __). The high-low per diems for 2013 remain unchanged from 2012 at $242 for high-cost localities and $163 for all other localities. Additionally, certain expenses are no longer included in the definition of incidental expenses.

Generally, per diem amounts approved by the IRS track the federal per diem rates published by the General Services Administration for travel within the continental United States by federal government employees on official business. In August, the GSA announced that the 2013 federal per diem rates would be unchanged from 2012. GSA explained that the rates were frozen in response to a White House directive requiring federal agencies to spend at least 30 percent less on travel expenses than in fiscal year 2010 through fiscal year 2016. “By keeping per diem rates at current levels, we are supporting federal agencies in controlling costs and ensuring that taxpayer dollars are used wisely,” GSA Acting Administrator Dan Tangherlini said in a statement.

Comment

The IRS announced in Rev. Proc. 2011-47, 2011-42 IRB 520, that going forward it would not revise the annual revenue procedure that provides rules for using a per diem rate to substantiate the amount of an employee’s expenses for lodging, meal and incidental expenses, or for meal and incidental expenses only, that a payor reimburses. Instead, the IRS would publish, as it has this year, an annual notice providing the special per diem rates and the list of high-cost localities.

Incidental expenses. The rate for the incidental-expenses-only deduction is $5 per day for post-September 30, 2012 travel, which is unchanged from the previous rate. In Rev. Proc. 2011-47, the IRS explained that the term “incidental expenses” has the same meaning as in the federal travel regulations. The federal travel regulations issued by GSA in 2011 describe incidental expenses as fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or stewardesses and others on ships. Transportation between places of lodging or business and places where meals are taken and the mailing cost associated with filing travel vouchers and payment of employer-sponsored charge card billings are excluded from definition of incidental expenses. As a result, taxpayers using per diem rates may separately deduct or be reimbursed for transportation and mailing expenses.

High-low method.The IRS-approved per diem rate for high-cost areas is $242 ($177 for lodging and $65 for meals and incidental expenses). The IRS-approved per diem rate for all other areas is $163 ($111 for lodging and $52 for meals and incidental expenses). The rates apply to per diem allowances paid for travel after September 30, 2012. Besides the high-low per diem rates remaining the same, the list of high-cost localities is also unchanged from 2012.

Transportation-industry per diem.The IRS-approved meal and incidental expenses rate for taxpayers in the transportation industry is $59 for all localities within the CONUS and $65 for all localities outside the CONUS.