The IRS, after being bombarded with public comments, has decided to reverse their decision to eliminate the High Low Method of calculating per diem deductions. We had written about this previously this year, and at the time the IRS had not received public comments regarding their plan to eliminate the method. Since then they have been flooded with public comments and reversed their decision. This is proof that the IRS actually does listen. Here are the details:
Under the High Low Method, and employer could use two rates published by the IRS to substantiate travel costs instead of using CONUS rates set for over 400 locations by the General Service Administration. The Conus rates provide travel/lodging and meal rates for every major city in the United States and around the world, while the High Low Method provided a rate for high cost areas and low cost areas.
In addition to reversing the elimination of the High Low Method, the IRS has also increased the rate for high cost regions by $9.00 and increased the rate for all other regions by $3.00. Businesses can continue to use the old rates until January 1st, 2012, or they can start using the new rates as of October 1st, 2011. You can find information on per diem rates online at the GSA website or download their smartphone app.. You can also contact us for any additional questions on per diem rates, how to record them and when it is appropriate to use them.