Further Guidance on Per Diem Deductibility
Back in November we posted about guidance under IRS Notice 2021-63 allowing for the temporary 100% deduction for the meals portion of the special per diem rate for motor carriers with drivers who are subject to the hours of service rules. Sometimes, guidance can create more confusion and questions than clarity. Under Notice 2021-63 it initially appeared the incidentals portion of the per diem did not qualify for the reprieve of being fully tax deductible for amounts paid or incurred in calendar years 2021 or 2022. However, after further analysis and an additional news release from the IRS in the form of IR-2021-225, there may be a position to claim a 100% deduction of the full per diem amount.
The additional guidance states that for taxpayers properly applying the rules of Revenue Procedure 2019-48, Notice 2021-63 allows the taxpayer to treat the full meal portion of a per diem rate or allowance as being attributable to food or beverages from a restaurant for amounts paid or incurred in calendar years 2021 or 2022. The guidance goes on to state that taxpayers should refer to section 6.05 of Revenue Procedure 2019-48 to determine the meals portion of a per diem rate or allowance paid or incurred. This trail back to section 6.05 of Revenue Procedure 2019-48 is key because in this section the guidance states to treat the entirety of a meals and incidentals per diem as an expense for food and beverage. With that there is a potential opportunity to claim a 100% deduction for the entire special per diem for the transportation industry.
This guidance does have some uncertainty due to the wording within Notice 2021-63 appearing at first glance to only allow the 100% deduction to apply to the meal portion of a per diem rate or allowance. We recommend consulting with your tax professional to discuss further.
Nathan is a CPA and has more than ten years of experience providing tax planning, consulting and compliance services to a number of privately held businesses and individuals in a variety of industries, with a special focus on the transportation and logistics industry. He actively communicates with clients and seeks ways to align their individual and business goals with available tax strategies to allow them to make well-informed decisions.
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