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 provided 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 incidental expenses only per diem substantiation method provided in section 4.02 of this revenue procedure.

.02 Specific high-low rates . Except as provided in section 5.06 of this revenue procedure, the per diem rate set forth in this section 5.02 is $258 for travel to any “highcost locality” specified in section 5.03 of this revenue procedure, or $163 for travel to any other locality within CONUS. The high or low rate, as appropriate, applies as if it were the federal per diem rate for the locality of travel. For purposes of applying the high-low substantiation method and the § 274(n) limitation on meal expenses (see section 6.05(3) of this revenue procedure), the amount of the high and low rates that is treated as paid for meals is $65 for a high-cost locality and $52 for any other locality within CONUS.

.03 High-cost localities . The following localities have a federal per diem rate of

October 19, 2009 527 2009–42 I.R.B.

$211 or more, and are high-cost localities for all of the calendar year or the portion of

the calendar year specified in parentheses under the key city name:

Key City County or other defined location

Arizona

Phoenix/Scottsdale Maricopa (January 1-May 31) Sedona City limits of Sedona (March 1-April 30)

California

Monterey Monterey Napa Napa (October 1-November 30 and April 1-September 30) San Diego San Diego 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) Denver/Aurora Denver, Adams, Arapahoe, and Jefferson Steamboat Springs Routt (December 1-March 31) Telluride San Miguel (December 1-March 31 and June 1-September 30) Vail Eagle (December 1-March 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 (January 1-March 31) Naples Collier (January 1-April 30)

Illinois

Chicago Cook and Lake

2009–42 I.R.B. 528 October 19, 2009

Key City County or other defined location

Maine

Bar Harbor Hancock (July 1-August 31)

Maryland

Baltimore City Baltimore City (October 1-November 30 and March 1-September 30) Cambridge/St. Michaels Dorchester and Talbot (June 1-August 31) Ocean City Worcester (June 1-August 31) 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 Hampshire

Conway Carroll (July 1-August 31)

New York

Floral Park/Garden City/Great Neck Nassau Glens Falls Warren (July 1-August 31) Lake Placid Essex (July 1-August 31) Manhattan (includes the boroughs of Manhattan, Brooklyn, the Bronx, Queens Bronx, Kings, New York, Queens, and Staten Island) Richmond

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

Pennsylvania

Hershey City of Hershey (June 1-August 31) Philadelphia Philadelphia

Rhode Island

Jamestown/Middletown/Newport Newport (October 1-October 31 and May 1-September 30)

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

October 19, 2009 529 2009–42 I.R.B.

Key City County or other defined location

Wyoming Teton and Sublette Jackson/Pinedale

(July 1-August 31)

kind, provided the payor has a reasonable belief that the employee incurred or will incur meal and incidental expenses during each day of travel.

.04 Proration of the federal per diem or M&IE rate . Under 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, 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:

(1) The rate may be prorated using the method prescribed by the Federal Travel Regulations. Currently the Federal Travel Regulations allow three-fourths of the applicable federal M&IE rate for each partial day during which an employee or self-employed individual is traveling away from home performing services as an employee or self-employed individual. The same ratio may be applied to prorate the allowance for incidental expenses described in section 4.05 of this revenue procedure; or

(2) The rate may be prorated using any method that is consistently applied and in accordance with reasonable business practice. For example, if an employee travels away from home from 9 a.m. one day to 5 p.m. the next day, a method of proration that results in an amount equal to two times the federal M&IE rate is treated as being in accordance with reasonable business practice (even though the Federal Travel Regulations would allow only one and a half times the federal M&IE rate).

.05 Application of the appropriate § 274(n) limitation on meal expenses . Except as provided in section 6.05(5), all or

.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. 2008–59 (changes listed by key cities).

(1) The following localities have been added to the list of high-cost localities: Monterey, California; Denver/Aurora, Colorado; Bar Harbor, Maine; Conway, New Hampshire; Glens Falls, New York; Lake Placid, New York; and Hershey, Pennsylvania.

(2) The portion of the year for which the following are high-cost localities has been changed: Phoenix/Scottsdale, Arizona; Napa, California; San Diego, California; Telluride, Colorado; Vail, Colorado; Miami, Florida; Naples, Florida; Baltimore City, Maryland; Cambridge/St. Michaels, Maryland; Ocean City, Maryland; and Jamestown/Middletown/Newport, Rhode Island.

(3) The following localities have been removed from the list of high-cost localities: Crested Butte/Gunnison, Colorado; Silverthorne/Breckenridge, Colorado; and Palm Beach, Florida.

(4) The following localities have been redefined: Floral Park/Garden City/Great Neck, New York no longer includes Glen Gove and Roslyn; Tarrytown/White Plains/New Rochelle, New York no longer includes Yonkers.

.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 for 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) For 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 de

scribed 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. 2008–59 for an employee during the first 9 months of calendar year 2009 may not use the high-low substantiation method in section 5 of this revenue procedure for that employee until January 1, 2010. A payor who used the high-low substantiation method of section 5 of Rev. Proc. 2008–59 for an employee during the first 9 months of calendar year 2009 must continue to use the high-low substantiation method for the remainder of calendar year 2009 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. 2008–59, 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, 2009, and before January 1, 2010, if those rates and localities are used consistently during this period for all employees reimbursed under this method.