Internal Revenue Service Proposes Changes to Meals and Entertainment Expenses Pursuant to TCJA

On February 26, 2020, the Internal Revenue Service (IRS) published a notice of proposed rulemaking titled Meals and Entertainment Expenses Under Section 274. The proposed rule provides guidance to taxpayers about the 2017 Tax Cuts and Jobs Act’s (TCJA) changes to meals and entertainment expenses under section 274 of the Internal Revenue Code. Under the TCJA, the deduction for entertainment, amusement, or recreation activities expenses was eliminated. The deduction for food and beverage expenses was limited, generally, to 50 percent of the amount otherwise allowable.

The IRS is certifying that the rule will not have a significant economic impact on a substantial number of small entities. While the agency acknowledges that the proposed rule will likely affect a substantial number of small entities, it has determined that the economic impact will not be significant because the proposed rule substantially incorporates prior IRS guidance (Notice 2018-76) and clarifies the TCJA changes to section 274. Notwithstanding its certification, the IRS specifically requests comments on any impact the proposed rule will have on small entities.

The comment period closes on April 13; a public hearing will be held on April 29.

• Review the notice or submit comments here.
• For further information about the public hearing or to be placed on the building access list to attend the hearing, call Regina Johnson at (202) 317-6901 or email fdms.database@irscounsel.treas.gov.
• Advocacy Contact: Charles Jeane at (202) 205-7168.