Monday, December 15, 2008

IRS Announces Mileage Rate For 2009

On Nov. 24, the Internal Revenue Service (IRS) announced that as of Jan. 1, 2009, the standard mileage rates for business miles driven will be 55 cents per mile.

The business mileage rate was 50.5 cents in the first half of 2008, and 58.5 cents in the second half, which was an adjustment based on rising gas prices.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating a vehicle. However, the rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Under Labor Code section 2802, California employers need to utilize the IRS mileage rate to reimburse employees for miles driven for business purposes. If faced with a claim for failure to reimburse expenses, the burden would be on the employer to prove that its mileage reimbursement rate adequately covered all of the employee's actual costs of operating a vehicle for employment purposes.

Employers should review their mileage reimbursement policies to stay in compliance with the law.

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