The Internal Revenue Service (“IRS”) has issued Notice 2021-63 to make clear how the temporary 100% business deduction for food or beverages from restaurants applies to taxpayers properly applying the rules of Rev. Proc. 2019-48 for using per diem rates.

Previously, the IRS issued Notice 2021-25 providing guidance under the Taxpayer Certainty and Disaster Relief Act of 2020, which added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. The temporary exception allows the full cost to be deductible if incurred after December 31,2020, and before January 1,2023, for food or beverages "provided by a restaurant." Refer to the following article for more information on Notice 2021-25 and the definition of “provided by a restaurant”: 100% Deduction for Meals

Notice 2021-63 provides a special rule for a taxpayer that properly applies the rules of Rev. Proc. 2019-48. For purposes of Internal Revenue Code § 274(n)(2)(D), a taxpayer may treat the meal portion of a per diem rate or allowance paid or incurred after December 31,2020, and before January 1,2023, as being attributable to food or beverages provided by a restaurant. Taxpayers should refer to section 6.05 of Rev. Proc. 2019-48 to determine the meal portion of a per diem rate or allowance paid or incurred.

For additional detail, please see Rev. Proc. 2019-48 and Notice 2021-63.