Full meals now part of per diem rate: IRS

Eat up and take the deduction — just be sure to follow the rules.

The IRS has issued Notice 2021-63 to make clear how taxpayers can leverage a temporary 100% business deduction for food or beverages from restaurants using per diem rates.

A taxpayer that properly applies the rules of Rev. Proc. 2019-48 may treat the meal portion of a per diem rate or allowance paid or incurred this year and next as attributable to food or beverages from a restaurant.

This latest clarification adds to IRS guidance under the Taxpayer Certainty and Disaster Relief Act of 2020 and its temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages.

The new notice 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.