Tuesday, May 31, 2011

IRS Has No Current Plans to Increase Standard Mileage Rates

The IRS stated during the May 12 payroll industry conference call that it has no current plans to increase the standard mileage rate of 51 cents per mile for business miles driven, despite the current high gasoline prices. Ligeia Donis, Assistant Branch Chief, IRS Office of Chief Counsel, gave two reasons for this. First of all, there is always the possibility that gas prices could decline. Second, the IRS had received some feedback from employers that the change was difficult to implement when it adjusted the standard mileage rate in the middle of 2008.

An employer that requires employees to supply their own autos may currently reimburse them at a rate that doesn't exceed 51 cents per mile for employment-connected business, and the reimbursement will be treated as a tax-free accountable plan reimbursement. The employee must substantiate the time, place, business purpose, and mileage of each trip. Additionally, an employee's personal use of lower-priced company autos during 2011 may be valued at 51 cents per mile if the conditions specified in Reg. §1.61-21(e)(1) are met.

No comments: