rp-03-22.pdf

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Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement;
determination of correct tax liability.
(Also Part I, §§ 162, 6001, 1.6001-1.)
Rev. Proc. 2003-22
SECTION 1. PURPOSE
This revenue procedure provides taxpayers engaged in the trade or business of
providing family day care with optional standard meal and snack rates to use in computing
the deductible cost of food provided to eligible children receiving care from family day
care providers.
SECTION 2. BACKGROUND
.01 Section 162(a) of the Internal Revenue Code allows a deduction for ordinary
and necessary expenses paid or incurred during the taxable year in carrying on a trade
or business. Under this section, family day care providers may deduct the cost of food
provided to eligible children in the family day care. For family day care providers who
receive reimbursements from a sponsor under the Child and Adult Care Food Program
(CACFP) of the Department of Agriculture, only the portion of the cost of food, if any, that
exceeds the reimbursements is deductible. Under § 262, however, no portion of the cost
of food provided to the family day care provider’s family, including food consumed by the
provider or the provider’s own children, is deductible.
.02 Section 6001 provides that every person liable for federal income tax shall keep
such records and comply with such rules as the Commissioner of Internal Revenue
prescribes. Section 1.6001-1(a) of the Income Tax Regulations provides that every
person must keep records to substantiate the amount of any deduction.
.03 Section 7602(a) provides that the Commissioner may examine any books,
papers, records, or other data that may be relevant to ascertaining the correctness of any
return, making a return where none has been made, or determining the liability of any
person for any internal revenue tax.
.04 Under §§ 162 and 6001, family day care providers must keep records that
substantiate deductions for food provided to eligible children in the family day care.

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Because family day care providers often purchase food that is used for their own families
as well as in carrying on their family day care business, they may have difficulty
substantiating the portion of the cost of food that is attributable to their family day care
business. Additionally, it is burdensome for family day care providers to keep receipts for
all food purchased during the taxable year for both the family day care and their own
family’s personal use. To minimize disputes concerning the records family day care
providers must keep to substantiate their deductible food cost, and to reduce burden by
eliminating the need to keep all receipts for food purchased during the taxable year, the
Internal Revenue Service will permit family day care providers to use the standard meal
and snack rates provided in this revenue procedure to compute the deductible cost of food
in lieu of using actual costs. A family day care provider who complies with all the
provisions of this revenue procedure will be deemed to meet the substantiation
requirements of § 6001 and the regulations thereunder for the purpose of computing the
deductible cost of food provided to eligible children in the family day care.
SECTION 3. SCOPE
This revenue procedure applies to any family day care provider, whether or not
licensed, registered, or otherwise regulated by the state or locality in which the family day
care operates, who chooses to use the standard meal and snack rates provided in this
revenue procedure to substantiate the deductible cost of meals and snacks provided to
eligible children in the family day care.
SECTION 4. DEFINITIONS
.01 Family Day Care Provider
. A family day care provider is a taxpayer engaged
in the trade or business of providing family day care.
.02 Family Day Care
. Family day care is child care provided to eligible children in
the home of the family day care provider that is (1) non-medical, (2) does not involve a
transfer of legal custody, and (3) generally lasts for less than 24 hours each day.
.03 Eligible Children. Except as otherwise provided in this section, eligible children
are unemancipated minors receiving family day care in the home of the family day care
provider. Eligible children do not include children who are full-time or part-time residents
in the home in which the child care is provided or children whose parent(s) or guardian(s)
are residents of the same home. For example, a family day care provider’s own children,
and any children who live in the family day care provider’s home on a full or part-time
basis, are not eligible children even if they receive day care services from the family day
care provider. Eligible children do not include children who receive day care services for
personal reasons of the family day care provider. For example, if a family day care
provider provides day care services for the provider’s sister’s child as a favor to the sister,
that child is not an eligible child within the meaning of this revenue procedure.

-3-
SECTION 5. APPLICATION
.01 In General. Family day care providers may compute the deductible cost of
each meal and snack actually purchased and served to an eligible child during the time
period when family day care is provided by using the standard meal and snack rates
provided in section 5.04 of this revenue procedure. A family day care provider may use
the standard meal and snack rates for a maximum of one breakfast, one lunch, one
dinner, and three snacks per eligible child per day. The rates apply regardless of whether
a family day care provider is reimbursed for food costs, in whole or in part, under the
CACFP, or under any other program, for a particular meal or snack. A family day care
provider who receives a reimbursement for a particular meal or snack, however, may
deduct only the portion of the applicable standard meal or snack rate that exceeds the
amount of the reimbursement.
.02 Rates Must Be Used Consistently
. Family day care providers may use either
the standard meal and snack rates or actual costs to calculate the deductible cost of food
provided to eligible children in the family day care in any particular taxable year. Family
day care providers who choose to use the standard meal and snack rates provided in this
revenue procedure for a particular taxable year must use the rates for all their deductible
food costs during that taxable year. However, a family day care provider who uses the
standard meal and snack rates in any taxable year may use actual costs to compute the
deductible cost of food in any other taxable year.
.03 Record Keeping
. To satisfy the record keeping requirements of § 6001 and the
regulations thereunder, family day care providers who use the standard meal and snack
rates provided in this revenue procedure must maintain records to substantiate their
computation of the total amount deductible under this revenue procedure for each taxable
year. The records should include the name of each eligible child, dates and hours of
attendance in the family day care, and the type and quantity of meals and snacks served.
This information may be recorded in the meal and snack log contained in the APPENDIX
to this revenue procedure. A family day care provider who uses the log in the APPENDIX
to maintain accurate and required information will be deemed to comply with the record
keeping requirements of § 6001 and the regulations thereunder.
.04 Standard Meal and Snack Rates
.
The standard meal and snack rates are equal to the Tier I reimbursement rates of
the CACFP for meals served in day care homes. For purposes of this revenue
procedure, the standard meal and snack rates for a taxable year are the Tier I rates in
effect on December 31 preceding the beginning of the family day care provider’s taxable
year. For example, for the 2003 taxable year, calendar year family day care providers will
use the Tier I rates in effect on December 31, 2002, as the standard meal and snack rates
to calculate their deductible food costs for the entire 2003 taxable year. The rates will be
adjusted annually (see section 5.06 of this revenue procedure).

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The standard meal and snack rates in effect on December 31, 2002 are:
(1) For all family day care providers other than those located in Alaska or Hawaii:
Breakfast$0.98
Lunch/Dinner$1.80
Snack$0.53
(2) For family day care providers located in Alaska:
Breakfast$1.55
Lunch/Dinner$2.93
Snack$0.87
(3) For family day care providers located in Hawaii:
Breakfast$1.13
Lunch/Dinner$2.11
Snack$0.63
.05 What is Included in the Standard Meal and Snack Rates
. The standard meal
rates apply to breakfast, lunch, and dinner. The standard meal and snack rates include
beverages, but do not include non-food supplies used for food preparation, service, or
storage, such as containers, paper products or utensils. The standard meal and snack
rates do not include other non-food items such as medication, administrative supplies, or
toys. A family day care provider who uses the standard meal and snack rates may
separately deduct the cost of these non-food items if the cost is deductible under § 162.
.06 Annual Adjustment of the Standard Meal and Snack Rates
. The standard meal
and snack rates will be adjusted annually. The Department of Agriculture adjusts the Tier I
reimbursement rates each July based on changes to the consumer price index for the
cost of food at home. Although the Tier I reimbursement rates apply for the period of July
1 to June 30 of each year, for purposes of this revenue procedure the standard meal and
snack rates applicable for a particular taxable year are the Tier I rates in effect on
December 31 preceding the beginning of the family day care provider’s taxable year.
Generally, the CACFP reimbursement rates may be found on the Internet at
www.usda.gov
under “Child and Adult Care Food Program.” The Service will post the
standard meal and snack rates currently in effect under this revenue procedure on the
Internet at www.irs.gov/businesses/small/industries/index.html, then click on “Child Care.”
The Service will also include the standard meal and snack rates that are current at the time
of publication in Publication 587, Business Use of Your Home.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective for taxable years beginning after December 31,
2002.

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SECTION 7. AUDIT PROTECTION
If a family day care provider uses the Tier I rates to compute the deductible cost of
food provided to eligible children in a taxable year that ends before January 1, 2003, the
Service will not raise the issue of the amount of the family day care provider’s deductible
food costs. If a family day care provider uses the Tier I rates to compute the deductible
cost of food provided to eligible children in a taxable year that ends before January 1,
2003, and the amount of the family day care provider’s deductible food costs is an issue
under consideration (within the meaning of section 3.09 of Rev. Proc. 2002-9) in
examination, in appeals, or before the U.S. Tax Court in a taxable year that ends before
January 1, 2003, that issue will not be further pursued by the Service.
DRAFTING INFORMATION
The principal author of this revenue procedure is Angella Warren of the Office of
Associate Chief Counsel (Income Tax and Accounting). For further information regarding
this revenue procedure, contact Ms. Warren at (202) 622-4950 (not a toll free call).

APPENDIX
Family Day Care Provider Meal and Snack Log
Name of Provider
TIN/SSN
Week of
Child’s NameMondayTuesdayWednesdayThursdayFridaySaturdaySundayTotals
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Number of breakfasts
served:
Number of lunches
served:
Number of dinners
served:
Number of snacks
served:
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Number of breakfasts
served:
Number of lunches
served:
Number of dinners
served:
Number of snacks
served:
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Number of breakfasts
served:
Number of lunches
served:
Number of dinners
served:
Number of snacks
served:
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Number of breakfasts
served:
Number of lunches
served:
Number of dinners
served:
Number of snacks
served:

Week of (page )
Child’s NameMondayTuesdayWednesdayThursdayFridaySaturdaySundayTotals
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Number of breakfasts
served:
Number of lunches
served:
Number of dinners
served:
Number of snacks
served:
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Number of breakfasts
served:
Number of lunches
served:
Number of dinners
served:
Number of snacks
served:
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Number of breakfasts
served:
Number of lunches
served:
Number of dinners
served:
Number of snacks
served:
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Hours of
attendance:

Bkfst 9
Snack 9
Lunch 9
Snack 9
Dinner 9
Snack 9
Number of breakfasts
served:
Number of lunches
served:
Number of dinners
served:
Number of snacks
served:
Weekly Totals: Breakfast Lunch Dinner Snacks

Family Day Care Provider Meal and Snack Log
Name of Provider
TIN/SSN
Taxable Year Ending
Total number of breakfasts served during the year x breakfast rate of $ = $ (annual breakfast cost)
Total number of lunches served during the year x lunch rate of $ = $ (annual lunch cost)
Total number of dinners served during the year
x dinner rate of $ = $ (annual dinner cost)
Total number of snacks served during the year x snack rate of $ = $ (annual snack cost)