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Temporary 100% Deduction for Business Meal Expenses

| Apr 8, 2021 | Firm News

In Notice 2021-25, issued today, the IRS announced a temporary increase in the deductibility of business meals from 50% to 100%. This temporary measure, described in the Taxpayer Certainty and Disaster Relief Act of 2020, is intended to provide relief to the restaurant industry.

Beginning Jan. 1, 2021, through Dec. 31, 2022, businesses can claim 100% of their food or beverage expenses paid to restaurants as long as the business owner (or an employee of the business) is present when food or beverages are provided and the expense is not lavish or extravagant under the circumstances.

Under the guidance provided for this temporary provision, restaurants include businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption. However, restaurants do not include businesses that primarily sell pre-packaged goods not for immediate consumption, such as grocery stores and convenience stores.

Additionally, an employer may not treat certain employer-operated eating facilities as restaurants, even if these facilities are operated by a third party under contract with the employer.

You can visit the IRS website for additional information. Also, be sure to check our website for further IRS announcements.

Willi Law Office, LLC has been providing personalized legal services to individuals and businesses in Westerville and Central Ohio for over 20 years.