IRS Per-diem Guidance Updates


On November 27, 2019 the Internal Revenue Service today issued updated guidance for business travelers, including changes resulting from the Tax Cuts and Jobs Act (TCJA). 

Revenue Procedure 2019-48 updates the rules for using per diem rates to substantiate the amount of ordinary and necessary business expenses paid, or incurred, while traveling away from home.  Taxpayers are not required to use one of the methods described in this revenue procedure but may substantiate actual allowable expenses provided they maintain adequate records.

The TCJA suspended the miscellaneous itemized deduction that employees could take for non-reimbursed business expenses. However, self-employed individuals and certain employees, such as Armed Forces reservists, fee-basis state or local government officials, eligible educators, and qualified performing artists, who deduct unreimbursed expenses for travel away from home may still use per diem rates for meals and incidental expenses, or incidental expenses only.

Revenue Procedure 2019-48 makes it clear that TCJA amended prior rules to disallow a deduction for expenses for entertainment, amusement, or recreation paid or incurred after Dec. 31, 2017.  Otherwise allowable meal expenses remain deductible if the food and beverages are purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment.

Rev. Proc. 2019-48 will be in IRB 2019-51, dated December 16.