IRS Provides Guidance on Per Diem Rates and the Temporary 100-Percent Deduction for Food or Beverages
The IRS today issued Notice 2021-63 to make clear how the temporary 100-percent business deduction for food or beverages from restaurants applies to taxpayers properly applying the rules of Revenue Procedure 2019-48 for using per diem rates.
Previously, the IRS issued Notice 2021-25 providing guidance under the Taxpayer Certainty and Disaster Relief Act of 2020, which added a temporary exception to the 50-percent limit on the amount that businesses may deduct for food or beverages. The temporary exception allows a 100-percent deduction for food or beverages from restaurants, as long as the expense is paid or incurred in 2021 or 2022.
For a taxpayer properly applying the rules of Revenue Procedure 2019-48, Notice 2021-63 provides a special rule that 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 beginning Jan. 1, 2021, through Dec. 31, 2022.
Taxpayers should refer to section 6.05 of Revenue Procedure 2019-48 to determine the meal portion of a per diem rate or allowance paid or incurred.