Effective July 1, 2011, the IRS has changed the optional standard mileage rate to 55.5 cents per mile. According to the IRS, this optional rate can be used to compute the deductible transportation costs paid or incurred for business purposes. Many non-profit organizations use this rate as a guide to reimburse employees who use their personal vehicle to conduct the organization’s business. Although 55.5 cents doesn’t sound like much, it is something that can add up quickly. Unfortunately, in tougher economic times, this could be a way that staff increase their paychecks if they think no one is watching.
Whether you use the IRS rate as your reimbursable amount or some other rate, here are some suggestions to manage these reimbursements:
- Review the policies at least annually.
- Ask staff how they interpret these policies, and address any ambiguities.
- Usually organizations only reimburse employees for mileage in excess of the miles that would be driven to the place of employment. For example, a case worker drives directly to a client’s house, which is 10 miles from the employee’s house. Your office is 6 miles from the employee’s house. Typically, you would only reimburse the employee for 4 miles of travel.
- As part of the hiring process, inform new staff of the organization’s policies and give examples of what is allowed and what is not.
- Periodically review these policies at staff meetings.
- Employees should keep a written log of the mileage, which should include at a minimum for each trip: Date of travel, destination, purpose of trip, and miles driven. If you receive federal or state grants, the granting agency may require you to keep more detailed records, such as odometer readings, address of the destination, or attach maps showing mileage.
- Prior to reimbursement, the mileage logs should be approved by the employees’ supervisors who are knowledgeable of their activities. The logs should also be periodically reviewed for inconsistencies, errors, redundant trips, and abuse.
Tags: employee reimbursement, mileage, mileage rate