• IRS Increases Standard Mileage Rates


    Well it is now official – the IRS has announced in Announcement 2011-40 that effective July 1, 2011, mileage rates for those that use the Standard Mileage Rate will now be $0.55 per mile for the rest of the year – 2011.

     In addition to the standard mileage rate for business expenses increasing, the standard mileage rates for medical and moving expenses will now be $0.235 per mile.

    What is hard to understand, however, is why the IRS kept the standard mileage rate for miles driven for charitable organizations at $0.14 per mile.  Why this rate wasn’t increased can be argued from many angles.  Two of those angles are:

    Angle #1 – Those that are benevolent minded will give money and donate their time regardless of the tax incentive to do so.  Therefore, why increase the mileage rate when it isn’t necessary?

    Angle #2 – This is a deduction that is so widely abused that the IRS is attempting to limit its misuse by minimizing the per mile deduction.

    From a reporting perspective, this will mean that the taxpayer will be required to keep and report deductible mileage in two groups:  Group #1 – January through June and Group #2 – July through December.

    Many will remember having to do the same type of record keeping the year that gas prices skyrocketed after Hurricane Katrina hit the United States.  Some blamed the IRS for taking too long then and some will blame the IRS for taking too long now.  If you are the IRS, can you ever win?

    Let us know your thoughts on this matter.  Is this increase too low?  Should the mileage rate increase be retroactive to January 1st?