Compliance November 27, 2007

IRS Puts Out 2008 Mileage Expense Allowance

November 27, 2007 (PLANSPONSOR.com) - Federal tax officials on Tuesday released the latest per-mile allowance (50.5 cents) for business mileage reimbursement for 2008.
Reported by

Revenue Procedure 2007-70 from the Internal Revenue Service (IRS) included a discussion of how employers should handle any amounts over the employee’s actual mileage costs.

Tax officials also discussed the need to keep substantiating records and what types of information must be in the records.

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The Revenue Procedure said a business mileage expense reimbursement arrangement meets IRS requirements if it:

  • Is connected to the needs of the business;
  • Is substantiated; and
  • If excess amounts are returned to the employer or counted as taxable income.

Also, if the automobile is operated less than 100% for business purposes, an allocation formula is required to determine the business and nonbusiness portions of the taxes and interest deduction allowable.

According to the guidance, the standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile conducted by Runzheimer International, an independent contractor.

Revenue Procedure 2007-70 is here .

 

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