Posted in: Best practices, Fringe benefits, Hiring & training staff, In this week's e-newsletter, IRS regs, Latest news & views, T&E
IRS just dropped a doozy on you: As of July 1, the standard business mileage rate will go up eight cents to 58.5 cents per mile. That rate is in effect until Dec. 31, 2008.
It’s a mixed bag for Accounting: On one hand, it should reduce the amount of griping you hear from employees who use their cars for business travel. On the other hand, it’ll require extra work on your part to get everyone up to speed.
If your company is matching the increase, be prepared to move quickly to get the word out to everyone who needs to know it. Because there’s so little time to prepare for the change, there’s likely to be some confusion.
Send a short, clearly worded memo to business travelers, managers who approve expense reports and any other affected co-workers. Better yet: Send one via email, and one on paper to increase the chances that at least one of them gets noticed.
As a further reminder, update any electronic expense report forms you have. If that’s not an option, place an “update” notice in an area that most travelers will see. That might mean the break room, A/P’s in-bin or any other highly trafficked spot.
Congress to change the rate again?
While IRS’ change is good through the end of the year there’s another potential change on the horizon. Currently, there are bills in the House and Senate that would raise the mileage rate to 70 cents – and make the change retroactive to Jan. 1, 2008.
It may take some time for the bills to make their way through Congress, but in an election year – with voters feeling the economic pinch of rising gas prices – it’s a safe bet that some version of the law will be passed.
Other rates to note
The rates for moving and medical mileage are also increasing to 27 cents per mile. (Use the moving rate if you reimburse an employee for a job-related move.) The charitable rate, set by Congress, is still 14 cents.