IRS Discontinues High-Low Method for Substantiating Travel Expenses

On Jul 19, a IRS announced that it is discontinuing a high-low process for substantiating lodging, dish and immaterial losses incurred in roving divided from home (Announcement 2011-42). Last year, a IRS asked for comments on either a high-low process was still needed, and it perceived no comments.

Under a high-low confirmation method, if an employer pays a per diem stipend in lieu of reimbursing tangible lodging, dish and immaterial losses an worker incurs when roving divided from home, a volume of a losses that is deemed substantiated (under Sec. 274(d)) for any calendar day is equal to a obtuse of a per diem stipend for that day or a volume computed during a rate supposing in an annual income procession for a locality of transport for that day or prejudiced day. This process was dictated to be a simplified confirmation process to be used in place of a unchanging per diem confirmation process regulating a sovereign per diem rate.

The IRS has annually released an updated per diem rate for transport to any specified “high-cost locality” or other locality within a continental United States. Under a high-low confirmation method, a high or low rate, as appropriate, practical as if it were a sovereign per diem rate for a locality of travel.

The IRS says it skeleton to tell a income procession after this year that will yield ubiquitous manners and procedures for substantiating transport losses (omitting a high-low confirmation method). It will afterwards no longer tell annual updates, though it will tell a new income procession usually when it modifies a manners and procedures. However, a IRS will continue edition a special travel attention per diem rate in an annual notice.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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