The IRS released Notice 2021-63 today to clarify how the temporary 100 percent business deduction for food or beverages from restaurants applies to taxpayers who follow the standards in Revenue Procedure 2019-48 for per diem rates.
The IRS previously issued Notice 2021-25, which provided guidance under the Taxpayer Certainty and Disaster Relief Act of 2020, which included a temporary exception to the 50 percent restriction on the amount that businesses can deduct for meals or beverages. If the expense is paid or incurred in 2021 or 2022, the temporary exception permits a 100 percent deduction for food or beverages from restaurants.
Beginning January 1, 2021, and ending December 31, 2022, a taxpayer who correctly applies the rules of Revenue Procedure 2019-48 can consider the complete meal component of a per diem rate or allowance as being due to food or beverages from a restaurant under Notice 2021-63. 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.