The change means day care providers could save an estimated 10 million hours by using the standard meal rate, the IRS said. If these providers decide not to use the rates, they can continue to take the deduction based o the actual cost of the meals.

The guidance, detailed in Revenue Procedure 2003-22, is effective for tax years beginning after December 31, 2002. However, if taxpayers used the standard meal rates (USDA Tier I rates) for prior taxable years to claim their deductible food costs, then the IRS will not raise the issue of the amount of the deduction claimed in the prior years.

The rates for family child care providers follow the United States Department of Agriculture’s Child and Adult Care Program, Tier I rate in effect each December 31 of the year preceding the current calendar year. The rates are adjusted by the USDA each July 1st. The rates in effect for calendar year 2003 for most of the United States are: breakfast, $0.98; lunch or dinner, $1.80; and snack, $0.53. Hawaii and Alaska have different rates.

Revenue procedure 2003-22 covers family day care providers, defined as taxpayers engaged in the trade or business of family day care. Family day care is defiled as care provided to children in the home that is non-medical, does not involve a transfer of custody and generally less than 24 hours. The standard rate is only available for children in the provider’s care who, are minors under parental control and not self supporting; are not full or part time residents of the home and; whose care is not provided for solely personal reasons.

The standard rate is allowed for up to one breakfast, one lunch and/or one dinner, and three snacks per day, per child, provided the meals and snacks are actually purchased and served. Providers may use the rate whether or not licensed, registered or otherwise regulated by the state or locality in which the care is provided.