SECTION 1. PURPOSE

This revenue procedure updates Rev. Proc. 2010–39, 2010–42 I.R.B. 459, and provides rules for using a per diem rate to substantiate, under section 274(d) of the Internal Revenue Code and section 1.274–5 of the Income Tax Regulations, the amount of ordinary and necessary business expenses paid or incurred while traveling away from home. Taxpayers are not required to use a method described in this revenue procedure. A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence.

This revenue procedure provides rules for using a per diem rate to substantiate the amount of an employee’s expenses for lodging, meal, and incidental expenses, or for meal and incidental expenses only, that a payor (an employer, its agent, or a third party) reimburses. Employees and self-employed individuals that deduct unreimbursed expenses for travel away from home may use a per diem rate for meals and incidental expenses, or incidental expenses only, under this revenue procedure. This revenue procedure does not provide rules for using a per diem rate to substantiate the amount of lodging expenses only.

Announcement 2011–42, 2011–32 I.R.B. 138, advised taxpayers that the Internal Revenue Service intends to discontinue the high-low substantiation method. Subsequently a number of taxpayers commented that they use the high-low substantiation method and asked that the Service retain it. Accordingly, this revenue procedure continues to authorize the high-low substantiation method.

Beginning with the rates for 2011–2012, the Service will publish an annual notice that provides the special per diem rates for purposes of sections 4.04, 4.05, and 5 of this revenue procedure and the list of high-cost localities for purposes of section 5 of this revenue procedure and will update this revenue procedure only as necessary.

ingly, a § 481(a) adjustment is neither permitted nor required.

(4) Scope limitations . The scope limitation in section 4.02(7) of Rev. Proc. 2011–14 (or any successor) does not apply to a change in method of accounting under this section 5.02. A taxpayer that is otherwise ineligible to file an automatic method change because it is under examination (as defined in section 3.08 of Rev. Proc. 2011–14 (or any successor)) for any income tax issue may change its method of accounting under this paragraph 5.02, however, the audit protection provisions of section 7 of Rev. Proc. 2011–14 (or any successor) do not apply.

.03 Change in method of determining the NAE-eligible amount .

(1) In general . A change in a taxpayer’s method for determining the portion of its applicable financial statement allowance for doubtful accounts that is attributable to current year NAE-eligible accounts receivable (as described in section 4.01(4) of this revenue procedure) is a change in method of accounting to which the provisions of § 446 and the regulations thereunder apply. A taxpayer within the scope of this revenue procedure is granted the consent of the Commissioner to change this method if the taxpayer complies with the applicable provisions of Rev. Proc. 2011–14 (or any successor) and this paragraph 5.03.

(2) Manner of making change . (a) A taxpayer makes a change in method of accounting under this paragraph 5.03 by attaching a statement to its original return for the taxable year of change (or to an amended return if under the limited relief for a late application provided in section 6.02(3)(d) of Rev. Proc. 2011–14, or any successor). The taxpayer is not required to file a copy of the statement with the national office under section 6.02(3)(a) of Rev. Proc. 2011–14 (or any successor). The statement must include the following information:

(i) The taxpayer’s name and taxpayer identification number for each applicant;

(ii) The beginning and ending dates of the year of change;

(iii) A description of the method the taxpayer uses to determine its NAE-eligible amount before and after the change; and

(iv) The designated automatic accounting method change number 35.

(b) A change under this paragraph 5.03 is made on a cut-off basis and applies only to accounts receivable earned on or after the first day of the taxable year of change. A taxpayer must continue to apply its former method to accounts receivable earned before the taxable year of change. Accordingly, a § 481(a) adjustment is neither permitted nor required.

(3) Scope limitation . The scope limitation in section 4.02(7) of Rev. Proc. 2011–14 (or any successor) does not apply to a change in method of accounting under this section 5.03.