n-16-58.pdf

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2016-2017 Special Per Diem Rates

Notice 2016-58

# SECTION 1. PURPOSE

This annual notice provides the 2016-2017 special per diem rates for taxpayers
to use in substantiating the amount of ordinary and necessary business expenses
incurred while traveling away from home, specifically (1) the special transportation
industry meal and incidental expenses (M&IE) rates, (2) the rate for the incidental
expenses only deduction, and (3) the rates and list of high-cost localities for purposes of
the high-low substantiation method.

# SECTION 2. BACKGROUND

Rev. Proc. 2011-47, 2011-42 I.R.B. 520, provides rules for using a per diem rate
to substantiate, under § 274(d) of the Internal Revenue Code and § 1.274-5 of the
Income Tax Regulations, the amount of ordinary and necessary business expenses
paid or incurred while traveling away from home. Taxpayers using the rates and list of
high-cost localities provided in this notice must comply with Rev. Proc. 2011-47. Notice
2015-63, 2015-42 I.R.B. 723, provides the rates and list of high-cost localities for the
period October 1, 2015, to September 30, 2016.

Section 3.02(3) of Rev. Proc. 2011-47 provides that the term "incidental
expenses" has the same meaning as in the Federal Travel Regulations, 41 C.F.R. 300-
3.1, and that future changes to the definition of incidental expenses in the Federal
Travel Regulations would be announced in the annual per diem notice. Subsequent to

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the publication of Rev. Proc. 2011-47, the General Services Administration published
final regulations revising the definition of incidental expenses under the Federal Travel
Regulations to include only fees and tips given to porters, baggage carriers, hotel staff,
and staff on ships. Transportation between places of lodging or business and places
where meals are taken, and the mailing cost of filing travel vouchers and paying
employer-sponsored charge card billings, are no longer included in incidental expenses.
Accordingly, taxpayers using the per diem rates may separately deduct or be
reimbursed for transportation and mailing expenses.

# SECTION 3. SPECIAL M&IE RATES FOR TRANSPORTATION INDUSTRY

The special M&IE rates for taxpayers in the transportation industry are $63 for
any locality of travel in the continental United States (CONUS) and $68 for any locality
of travel outside the continental United States (OCONUS). See section 4.04 of Rev.
Proc. 2011-47.

# SECTION 4. RATE FOR INCIDENTAL EXPENSES ONLY DEDUCTION

The rate for any CONUS or OCONUS locality of travel for the incidental
expenses only deduction is $5 per day. See section 4.05 of Rev. Proc. 2011-47.

## SECTION 5. HIGH-LOW SUBSTANTIATION METHOD

1\. Annual high-low rates. For purposes of the high-low substantiation method, the
per diem rates in lieu of the rates described in Notice 2015-63 (the per diem
substantiation method) are $282 for travel to any high-cost locality and $189 for travel to
any other locality within CONUS. The amount of the $282 high rate and $189 low rate
that is treated as paid for meals for purposes of § 274(n) is $68 for travel to any high-
cost locality and $57 for travel to any other locality within CONUS. See section 5.02 of

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Rev. Proc. 2011-47. The per diem rates in lieu of the rates described in Notice 2015-63
(the meal and incidental expenses only substantiation method) are $68 for travel to any
high-cost locality and $57 for travel to any other locality within CONUS.

2\. High-cost localities. The following localities have a federal per diem rate of $236
or more, and are high-cost localities for all of the calendar year or the portion of the
calendar year specified in parentheses under the key city name.

Key city

County or other defined location

Arizona

Sedona

City Limits of Sedona

(March 1-April 30)

California

Los Angeles

Los Angeles, Orange,

(January 1-March 31)

Ventura, Edwards AFB less the city of Santa Monica

Mill Valley/San Rafael/Novato

Marin

(October 1-October 31 and June 1-September 30)

Monterey

Monterey

(July 1-August 31)

Napa

Napa

(October 1-October 31 and May 1-September 30)

San Francisco

San Francisco

San Mateo/Foster City/Belmont

San Mateo

Santa Barbara

Santa Barbara

Santa Monica

City limits of Santa Monica

Sunnyvale/Palo Alto/San Jose

Santa Clara

Colorado

Aspen

Pitkin

(December 1-March 31 and June 1-August 31)

Denver/Aurora

Denver, Adams, Arapahoe,

(October 1-November 30 and

and Jefferson

February 1-September 30)

Grand Lake

Grand

(December 1-March 31)

Silverthorne/Breckenridge

Summit

(December 1-March 31)

Steamboat Springs

Routt

(December 1-March 31)

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Telluride
(December 1-March 31 and June 1-August 31)

San Miguel
Vail
(December 1-August 31)

Eagle

District of Columbia

Washington D.C. (also the cities of Alexandria, Falls Church, and Fairfax, and the
counties of Arlington and Fairfax, in Virginia; and the counties of Montgomery and
Prince George's in Maryland) (See also Maryland and Virginia)

Florida

Palm Beach and Hendry

Boca Raton/Delray Beach/Jupiter (January 1-April 30)

Fort Lauderdale

Broward

(January 1-April 30)

Fort Walton Beach/De Funiak Springs

Okaloosa and Walton

(June 1-July 31)

Key West

Monroe

Miami

Miami-Dade

(December 1-March 31)

Naples

Collier

(December 1-April 30)

Vero Beach

Indian River

(December 1-April 30)

Illinois

Chicago

Cook and Lake

(October 1-November 30 and

April 1-September 30)

Maine

Bar Harbor

Hancock

(July 1-August 31)

Maryland

Ocean City

Worcester

(June 1-August 31)

Washington, DC Metro Area

Montgomery and Prince George's

Massachusetts

Boston/Cambridge

Suffolk, city of Cambridge

Falmouth

City limits of Falmouth

(July 1-August 31)

Martha's Vineyard

Dukes

(June 1-September 30)

Nantucket

Nantucket

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(October 1-December 31 and
June 1-September 30)

Michigan
Traverse City/Leland
(July 1-August 31)

New York
Lake Placid
(July 1-August 31)
New York City

Saratoga Springs/Schenectady
(July 1-August 31)

North Carolina
Kill Devil
(June 1-August 31)

Oregon
Seaside
(July 1-August 31)

Pennsylvania
Hershey
(June 1-August 31)
Philadelphia
(October 1-November 30, April 1-June 30,
and September 1-September 30)

Rhode Island
Jamestown/Middletown/Newport
(July 1-August 31)

South Carolina
Charleston
(October 1-November 30 and
March 1-September 30)

Utah
Park City
(December 1-March 31)

Virginia
Virginia Beach
(June 1-August 31)

Grand Traverse and Leelanau

Essex

Bronx, Kings, New York, Queens,
and Richmond
Saratoga and Schenectady

Dare

Clatsop

Hershey
Philadelphia

Newport

Charleston, Berkeley and
Dorchester

Summit

City of Virginia Beach

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Wallops Island
(July 1-August 31)
Washington, DC Metro Area

Accomack

Cities of Alexandria, Fairfax, and
Falls Church; counties of
Arlington and Fairfax

Washington
Seattle

King

Wyoming
Jackson/Pinedale
(July 1-August 31)

Teton and Sublette

3\. Changes in high-cost localities. The list of high-cost localities in this notice differs
from the list of high-cost localities in section 5 of Notice 2015-63.

a. The following localities have been added to the list of high-cost localities:
Sedona, AZ; Los Angeles, California; Mill Valley/San Rafael/Novato, California;
Vero Beach, Florida; Kill Devil, North Carolina; Seaside, Oregon.

b. The following localities have changed the portion of the year in which they are
high-cost localities: Denver/Aurora, Colorado; Vail, Colorado; Fort Lauderdale,
Florida; Naples, Florida; Chicago, Illinois; Philadelphia, Pennsylvania;
Jamestown/Middletown/Newport, Rhode Island; Jackson/Pinedale, Wyoming.

c. The following localities have been removed from the list of high-cost localities:
Mammoth Lakes, California; Midland, Texas.

### SECTION 6. EFFECTIVE DATE

This notice is effective for per diem allowances for lodging, meal, and incidental
expenses, or for meal and incidental expenses only, that are paid to any employee on
or after October 1, 2016, for travel away from home on or after October 1, 2016. For
purposes of computing the amount allowable as a deduction for travel away from home,
this notice is effective for meal and incidental expenses or for incidental expenses only

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paid or incurred on or after October 1, 2016. See sections 4.06 and 5.04 of Rev. Proc.
2011-47 for transition rules for the last 3 months of calendar year 2016.

SECTION 7. EFFECT ON OTHER DOCUMENTS

Notice 2015-63 is superseded.

# DRAFTING INFORMATION

The principal author of this notice is Elizabeth Binder of the Office of Associate
Chief Counsel (Income Tax & Accounting). For further information regarding this notice
contact Elizabeth Binder at (202) 317-7005 (not a toll-free call).