Washington (Feb. 25, 2003) -- The Internal Revenue Service announced Monday that family day care providers may now choose to use a standardized rate to claim the deduction for meals provided to children in their care instead of keeping detailed records and receipts of food purchased for use in their business. Use of the standardized rate will significantly reduce the recordkeeping burden of family day care providers.The change means day care providers could save an estimated 10 million hours by using the standard meal rate. If these providers decide not to use the rates, they can continue to take the deduction based on the actual cost of the meals.

The new rules are effective for tax years beginning after December 31, 2002. However, if taxpayers used the standard meal rates (USDA Tier I rates) for prior taxable years to claim their deductible food costs, then the IRS will not raise the issue of the amount of the deduction claimed in the prior years.

The Red Leaf Institute, a non-profit organization committed to improving the quality of family care, submitted the idea of allowing child care providers to use a standardized meal deduction to the IRS Industry Issue Resolution (IIR) Program. This program is designed to address issues that are frequently disputed or burdensome.

-- Electronic Accountant Newswire staff

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