WASHINGTON -- The Internal Revenue Service has updated its rules for special per-diem rates for transportation industry taxpayers business expenses paid or incurred while traveling away from home.

These special rates are explained in IRS Notice 2012-63, and differ from those for other taxpayers. They took effect Oct. 1.

The special meals and incidental expenses rates for taxpayers in the transportation industry are $59 for any travel in the continental United States and $65 for travel outside the continental U.S.

Incidental expenses alone are $5 per day, in or outside the continental U.S., IRS said.

Several items are no longer included in incidental expenses, according to the notice. Among them are transportation between places of lodging or business and places where meals are taken, and the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings.

However, taxpayers using per-diem rates may separately deduct or be reimbursed for transportation and mailing expenses, IRS said.

High-low method

For purposes of the high-low substantiation method, the per-diem rates in lieu of the rates described in the revenue procedure (the per diem substantiation method) are $242 for travel to high-cost localities and $163 for travel to any other areas.

The amount of the $242 high rate and $163 low rate that is treated as paid for meals for purposes of tax code Section 274(n) is $65 for travel to any high-cost locality and $52 for travel to any other locality within the continental United States.

Some of the high-cost localities, including Sedona, Ariz.; Telluride, Colo., and Fort Lauderdale, Fla., are considered high-cost localities for a portion of the year.

There are no changes in the list of high-cost localities in this years notice from those in Section 5 of Notice 2011-81.

Notice 2012-63 will appear in Internal Revenue Bulletin 2012-42, dated Oct. 15.