SECTION 5. HIGH-LOW

SUBSTANTIATION METHOD

.01 In general . If a payor pays a per diem allowance in lieu of reimbursing actual 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 equal to the lesser of the per diem allowance for that day or the amount computed at the rate set forth in section 5.02 of this revenue procedure for the locality of travel for that day (or partial day, see section 6.04 of this revenue procedure). Except as provided in section 5.06 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 meal and

Key City County or other defined location

Arizona

Phoenix/Scottsdale Maricopa (January 1-April 30) Sedona City Limits of Sedona (March 1-April 30)

California

Napa Napa San Diego San Diego (January 1-August 31) San Francisco San Francisco Santa Barbara Santa Barbara Santa Monica City limits of Santa Monica South Lake Tahoe El Dorado (December 1-March 31)

Colorado

Aspen Pitkin (December 1-April 30) Crested Butte/Gunnison Gunnison (December 1-March 31) Silverthorne/Breckenridge Summit (December 1-April 30) Steamboat Springs Routt (December 1-March 31) Telluride San Miguel (October 1-March 31)

2008–41 I.R.B. 861 October 14, 2008

Key City County or other defined location

Colorado (continued)

Vail Eagle (December 1-July 31)

District of Columbia

Washington D.C. (also the cities of Alexandria, Falls Church, and Fairfax, and the counties of Arlington and Fairfax, in Virginia; and the counties of Montgomery and Prince George’s in Maryland) (See also Maryland and Virginia)

Florida

Fort Lauderdale Broward (October 1-April 30) Fort Walton Beach/De Funiak Springs Okaloosa and Walton (June 1-July 31) Key West Monroe Miami Miami-Dade (October 1-February 28) Naples Collier (February 1-March 31) Palm Beach

Palm Beach Boca Raton, Delray Beach, Jupiter, Palm

(December 1-April 30) Beach Gardens, Palm Beach, Palm Beach

Shores, Singer Island and West Palm Beach Illinois

(December 1-April 30)

Chicago Cook and Lake

Maryland

Baltimore City Baltimore City Cambridge/St. Michaels Dorchester and Talbot (May 1-August 31) Ocean City Worcester (June 1-September 30) Washington, DC Metro Area Montgomery and Prince George=s

Massachusetts

Boston/Cambridge Suffolk, City of Cambridge Martha’s Vineyard Dukes (June 1-August 31) Nantucket Nantucket (June 1-September 30)

New York

Floral Park/Garden City/Glen Cove/Great Neck/Roslyn Nassau Manhattan (includes the boroughs of Manhattan, Brooklyn, Bronx, Kings, New York, Queens, the Bronx, Queens and Staten Island) Richmond

Saratoga Springs/Schenectady Saratoga and Schenectady (July 1-August 31) Tarrytown/White Plains/New Rochelle/Yonkers Westchester

Pennsylvania

Philadelphia Philadelphia

Rhode Island

Jamestown/Middletown/Newport Newport (June 1-September 30)

October 14, 2008 862 2008–41 I.R.B.

Key City County or other defined location

Utah

Park City Summit (January 1-March 31)

Virginia

Washington, DC Metro Area Cities of Alexandria, Fairfax, and Falls Church; counties of Arlington and Fairfax Washington

Seattle King

Wyoming

Jackson/Pinedale Teton and Sublette (July 1-August 31)

Travel Regulations, 41 C.F.R. Part 301–11 (2007), except as provided in sections 6.02 through 6.04 of this revenue procedure.

.02 Federal per diem rate . A receipt for lodging expenses is not required in determining the amount of expenses deemed substantiated under section 4.01 or 5.01 of this revenue procedure. See section 7.01 of this revenue procedure for the requirement that the employee substantiate the time, place, and business purpose of the expense.

.03 Federal per diem or M&IE rate . A payor is not required to reduce the federal per diem rate or the federal M&IE rate for the locality of travel for meals provided in kind, provided the payor has a reasonable belief that meal and incidental expenses were or will be incurred by the employee during each day of travel.

.04 Proration of the federal per diem or M&IE rate . Pursuant to the Federal Travel Regulations, in determining the federal per diem rate or the federal M&IE rate for the locality of travel, the full applicable federal M&IE rate is available for a full day of travel from 12:01 a.m. to 12:00 midnight. The method described in section 6.04(1) of this revenue procedure must be used for purposes of determining the amount deemed substantiated under section 4.03 or 4.05 of this revenue procedure for partial days of travel away from home. For purposes of determining the amount deemed substantiated under section 4.01, 4.02, 4.04, or 5 of this revenue procedure for partial days of travel away from home, either of the following methods may be used to prorate the federal M&IE rate to determine the federal per diem rate or the federal M&IE rate for the partial days of travel:

.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. 2007–63 (changes listed by key cities).

(1) The following localities have been added to the list of high-cost localities: Jackson/Pinedale, Wyoming.

(2) The portion of the year for which the following are high-cost localities has been changed: Phoenix/Scottsdale, Arizona; San Diego, California; Silverthorne/Breckenridge, Colorado; Steamboat Springs, Colorado; Vail, Colorado; Palm Beach, Florida; Cambridge/St. Michaels, Maryland; Ocean City, Maryland; Martha’s Vineyard, Massachusetts; Nantucket, Massachusetts; Jamestown/Middletown/Newport, Rhode Island.

(3) The following localities have been removed from the list of high-cost localities: Palm Springs, California; Yosemite National Park, California; Stuart, Florida; Incline Village/Crystal Bay/Reno/Sparks, Nevada; Conway, New Hampshire; Providence, Rhode Island; Loudon County, Virginia; Virginia Beach, Virginia; Lake Geneva, Wisconsin.

.05 Specific limitation . (1) Except as provided in section 5.05(2) of this revenue procedure, 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. See section 5.06 of this revenue procedure for transition rules.

(2) With respect to an employee described in section 5.05(1) of this revenue

procedure, the payor may reimburse actual expenses or use the meal and incidental expenses only per diem substantiation 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.

.06 Transition rules . A payor who used the substantiation method of section 4.01 of Rev. Proc. 2007–63 for an employee during the first 9 months of calendar year 2008 may not use the high-low substantiation method in section 5 of this revenue procedure for that employee until January 1, 2009. A payor who used the high-low substantiation method of section 5 of Rev. Proc. 2007–63 for an employee during the first 9 months of calendar year 2008 must continue to use the high-low substantiation method for the remainder of calendar year 2008 for that employee. A payor described in the previous sentence may use the rates and high-cost localities published in section 5 of Rev. Proc. 2007–63, in lieu of the updated rates and high-cost localities provided in section 5 of this revenue procedure, for travel on or after October 1, 2008, and before January 1, 2009, if those rates and localities are used consistently during this period for all employees reimbursed under this method.