SECTION 5. HIGH-LOW

SUBSTANTIATION METHOD

.01 General rule . If a payor pays a per diem allowance in lieu of reimbursing actual expenses for lodging, meal, and incidental expenses incurred or to be incurred by an employee for travel away from home and the payor uses the high-low substantiation method described in this section 5 for travel within CONUS, the amount of the expenses that is deemed substantiated for each calendar day is

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equal to the lesser of the per diem allowance for such day or the amount computed at the rate set forth in section 5.02 of this revenue procedure for the locality of travel for such day (or partial day, see section 6.04 of this revenue procedure). This high-low substantiation method may be used in lieu of the per diem substantiation method provided in section 4.01 of this revenue procedure, but may not be used in lieu of the meals only substantia

tion method provided in section 4.02 or 4.03 of this revenue procedure. .02 Specific high-low rates . The per diem rate set forth in this section 5.02 is $180 for travel to any “high-cost locality” specified in section 5.03 of this revenue procedure, or $113 for travel to any other locality within CONUS. Whichever per diem rate applies, it is applied as if it were the Federal per diem rate for the locality of travel. For purposes of applying the

high-low substantiation method, the Federal M&IE rate shall be treated as $40 for a high-cost locality and $32 for any other locality within CONUS.

.03 High-cost localities . The following localities have a Federal per diem rate of $147 or more for all or part of the calendar year, and are high-cost localities for all of the calendar year or the portion of the calendar year specified in parenthesis under the key city name:

Key city County and other defined location

Arizona

Grand Canyon All points in the Grand Canyon National Park and Kaibab National Forest within Coconino County California

Los Angeles Los Angeles, Kern, Orange, and Ventura Counties; Edwards Air Force Base, Naval Weapons Center and Ordnance Test Station, China Lake Napa Napa (April 1-October 31) Palo Alto/San Jose Santa Clara Point Arena/Gualala Mendocino San Francisco San Francisco Colorado

Aspen Pitkin Keystone/Silverthorne Summit Telluride San Miquel Vail Eagle (November 1-March 31) Delaware

Lewes Sussex (June 1-September 14) District of Columbia Washington, D.C.; the cities of Alexandria, Falls Church, and Fairfax, and the counties of Washington, D.C. Arlington, Loudoun, and Fairfax in Virginia; and the counties of Montgomery and Prince George’s in Maryland Florida

Key West Monroe (December 15-April 30) Naples Collier December 15-April 30) Illinois

Chicago Du Page, Cook, and Lake Indiana

Nashville Brown (June 1-October 31) Maine

Bar Harbor Hancock (July 1-September 14) Maryland

(For the counties of Montgomery and Prince George’s, see District of Columbia)

Baltimore Baltimore and Harford Ocean City Worcester (May 1-September 30) Saint Michaels Talbot (April 1-November 30)

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Key city County and other defined location Maryland—Continued Massachusetts

Boston Suffolk Cambridge/Lowell Middlesex Martha’s Vineyard Dukes (June 1-October 31) Nantucket Nantucket (June 1-October 31) Nevada

Incline Village All points in the Northern Lake Tahoe area within Washoe County (June 1-September 30) New Hampshire

Hanover Grafton and Sullivan (June 1-October 31) New Jersey

Ocean City/Cape May Cape May (May 15-September 30) Parsippany/Dover Morris; Picatinny Arsenal New Mexico

Santa Fe Santa Fe (May 1-October 31) New York

New York City The boroughs of Bronx, Brooklyn, Manhattan, Queens, and Staten Island; Nassau and Suffolk Counties Tarrytown/White Plains Westchester North Carolina

Kill Devil/Duck/ Dare Outer Banks (May 1-September 30) Pennsylvania

Philadelphia Philadelphia; city of Bala Cynwyd in Montgomery County Rhode Island

Newport/Block Island Newport and Washington (May 1-October 14) South Carolina

Hilton Head Beaufort (March 1-September 30) Myrtle Beach Horry; Myrtle Beach Air Force Base (May 1-September 30) Utah

Park City Summit (December 1-March 31) Virginia

(For the cities of Alexandria, Fairfax, and Falls Church, and the counties of Arlington, Fairfax, and Loudoun, see District of Columbia) Washington

Friday Harbor San Juan (June 1-October 31) Seattle King Wyoming

Jackson Teton (June 1-October 14)

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.04 Changes in high-cost localities . The list of high-cost localities in section 5.03 of this revenue procedure differs from the list of high-cost localities in section 5.03 of Rev. Proc. 96-64. The following localities have been added to the list of high-cost localities: Napa, California; Lewes, Delaware; Naples, Florida; Baltimore, Maryland; Hanover, New Hampshire; Parsippany/Dover, New Jersey; Tarrytown, New York; Kill Devil, North Carolina; Hilton Head, South Carolina; Myrtle Beach, South Carolina; Friday Harbor, Washington; and Seattle, Washington. The portion of the year for which the following are high-cost localities has been changed: Aspen, Colorado; Key West, Florida; Saint Michaels, Maryland; Martha’s Vineyard, Massachusetts; Nantucket, Massachusetts; and Incline Village, Nevada. The following localities have been removed from the list of highcost localities: Phoenix/Scottsdale, Arizona; South Lake Tahoe, California; Yosemite National Park, California; Steamboat Springs, Colorado; Hyannis, Massachusetts; Leland, Michigan; Mackinac Island, Michigan; Stateline, Nevada; Atlantic City, New Jersey; Sandusky, Ohio; Chester/Radnor, Pennsylvania; Bullfrog, Utah; Virginia Beach, Virginia; Wintergreen, Virginia; and Wisconsin Dells, Wisconsin.

.05 S pecific limitation . A payor that uses the high-low substantiation method with respect to an employee must use that method for all amounts paid to that employee for travel away from home within CONUS during the calendar year. However, with respect to that employee, the payor may still reimburse actual expenses or use the meals only per diem method described in section 4.02 of this revenue procedure for any travel away from home, and may use the per diem substantiation method described in section 4.01 of this revenue procedure for any OCONUS travel away from home.