Tax News Archive:

Choice given by IRS for the new Federal Per Diem rates

Come Oct 1st, 2000, taxpayers on official government business that use allowances from employers for lodging, meals, and transportation will have a choice either to keep using the old rates for the rest of the year, which still has 3 months to go, or the new federal per diem rates that will become effective on that day. To find out the per diem rates for the continental United States check out the site for General Services Administration at

GSA from now on will make changes according to the Government’s fiscal year instead of the calendar year. These rates are used by employers to set reimbursement limits for their employee’s travel expenses. As long as the travel expenses don’t exceed those set by the GSA, the travel expenses are tax-free for the employers.

Although the taxpayers are being given the choice between the rates, they cannot switch one from the other once they choose a rate. If they decide to wait till the end of the calendar year to start using the new rates, then for the next three months even though the new rates become eligible for use on Oct.1st, the taxpayers will have to use the rate for the year 2000 on all their trips. They will have to wait till Jan.1st after once making the decision to go with the old rates to start using the new rate.

Due to the diversity of the rates, each one is specific to a region or part of the country or town, the IRS has asked the employers to use a "high-low" method for figuring out reimbursements and the per diem rates. If you use this method then you will have to wait till Jan 1st. 2001 to utilize the new rates, this also applies to you if you use transportation meal rates.