Beginning January 1, 2012, the standard mileage rates for the use of a vehicle for business miles driven will remain at 55.5 cents per mile.
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IRS Mileage Rate Remains Unchanged
By Christopher W. Olmsted
The Internal Revenue Service issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business purposes.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be 55.5 cents per mile for business miles driven.
The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile.
Link to IRS Announcement
Mileage Reimbursements: The Road to Litigation
Employers have gone down the road of litigation after failing to reimburse employees for mileage. California Labor Code section 2802, subdivision (a), requires an employer to indemnify its employees for expenses they necessarily incur in the discharge of their duties. This includes, of course travel expenses. Employers should reimburse employees for mileage driven for business purposes in personal vehicles. (This does not include commute miles.)
It is important to note that any time an employee uses his or her own vehicle for business purposes, including running an errand for business reasons, the employee has incurred expenses. The expenses take the form of fuel and wear and tear on the vehicle.
Companies sometimes inadvertently overlook travel expenses incurred by lower level workers. Such oversights lead to wage and hour liability. For example, in 2008 Starbucks settled an employee mileage reimbursement class action for $3 million. Reportedly Starbucks had a travel expense policy applicable to corporate executives. No such policy existed for the reimbursement of travel expenses when store-level staff drove their personal vehicles for business reasons.
Practical Tips To Ensure Compliance
Handbook. Review the company handbook; ensure that it provides that all workers are reimbursed for travel expenses.
Procedures. Implement procedures for employees to claim and receive reimbursement for travel and other expenses. For example, you may want to provide an expense form to all workers expected to drive their cars for business reasons. Instruct them to sign and turn in the form each month (regardless of whether actual expenses were incurred).
Training. Train managers and supervisors so that they know to collect expense reports or receipts from all employees running errands or otherwise using personal vehicles for company purposes.
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