IRS DECREASES STANDARD AUTO MILEAGE REIMBURSEMENT RATES EFFECTIVE 1/1/10

The IRS has announced that effective January 1, 2010, the standard mileage rate for BUSINESS usage decreases from the current $0.55 to $0.50 per mile. Effective on the same date, the automobile reimbursement rate for deductible MEDICAL and MOVING expenses decreases from $0.24 to $0.165 per mile. However, there is no change in the reimbursement rate applicable to mileage incurred for CHARITABLE purposes. That remains at $0.140 per mile.

Seeking to reduce record keeping, the IRS has allowed taxpayers who use no more than four vehicles at the same time for business purposes, to use the standard mileage rate instead of requiring them to document the actual expenses for each vehicle.

Any of the standard automobile mileage rates are a “short cut” authorized by the IRS when taxpayers substantiate the cost of automobile usage. The flat mileage rate does not cover parking or tolls. The IRS considers that the substantiation and adequate accounting requirements for employer-reimbursed BUSINESS expenses, for example, are satisfied by employers and employees who merely use the $0.50 a mile rate (effective January 1, 2010). It is not necessary to provide sales receipts or other documentation, as long as the time, place, business purpose of the expense, and the number of miles traveled, are evident.