The Internal Revenue Service (IRS) has released its proposed regulations regarding tax treatment for business meals and entertainment activities. The proposed regulations are consistent with the prior guidance released by the agency in 2018.
The National Business Aviation Association (NBAA) on April 13, 2020, submitted comments on the proposed rules that were drafted by Holland & Knight Partner John Hoover, chair of the NBAA tax committee.
The Tax Cuts and Jobs Act in 2018 introduced significant changes to the Internal Revenue Code, including to Section 274, with the elimination of deductions for business entertainment expenses. In 2018, the IRS issued Notice 2018-76 as interim guidance to clarify that business meals are generally not viewed as business entertainment, and therefore business meals can still be deducted if certain conditions are met. (See Holland & Knight's previous alert, " NBAA Comments on IRS Notice Regarding Business Meals," Nov. 15, 2018.)
The NBAA asked the IRS to be consistent with its determination that business meals are not entertainment by classifying non-business meals as non-entertainment. Whether a non-business trip is classified as personal entertainment or personal non-entertainment should not depend on whether a meal is served.
In addition, the association asked that the IRS reschedule its public hearing on April 29, 2020, until it is safe to hold considering the coronavirus (COVID-19) outbreak and to allow interested parties time to prepare comments.
The NBAA has an article on its website regarding the proposed rule and its comments.
Originally published 20 April, 2020
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