IRS Announced 1991 Standard Mileage Rates

WASHINGTON - The Internal Revenue Service today announced that final regulations providing guidance to employers and employees on the tax treatment of employee business expenses under a reimbursement or other expense allowance arrangement will be published in the Federal Register on Monday, December 17, 1990. These final regulations reflect changes to the law made by the Family Support Act of 1988. These regulations also provide guidance to employees regarding the deduction of business expenses.

Under the Act, an employee cannot claim an adjustment to income for reimbursed employee expenses unless the expenses are reimbursed under an arrangement that requires substantiation and any excess reimbursements are returned to the employer. The new rules announced today provide guidance to employers on what constitutes an accountable reimbursement plan.

In addition, the IRS today released Revenue Procedure 90-59 containing the 1991 standard mileage rates for computing the deductible costs of operating a passenger automobile for business, charitable, medical, or moving expense purposes. This revenue procedure updates Revenue Procedure 89-66.

The standard mileage rate for business use of an automobile in 1991 will be 27.5 cents a mile -- up from the 26 cents a mile used in 1990. The 27.5 cents a mile takes into consideration the new 5 cents per gallon increase in the federal fuel tax and recent gas price increases. For charitable activities, the standard mileage rate is provided by statute and will remain at 12 cents a mile in 1991. For medical and moving expense purposes, the standard mileage rate for 1991 will stay at nine cents a mile. The special standard mileage rate for business use of an automobile by rural mail carriers will be 41.25 cents per mile for 1991.

The IRS also said that employees may substantiate and adequately account for the amount of the business expenses as required by the regulations if employers use the 27.5 cents a mile rate for reimbursing employees for business use of an automobile.

The IRS also released today revenue Procedure 90-60 providing rules for the amount of employee business travel expenses that will be deemed to meet the substantiation requirements of the regulations. This revenue procedure updates Revenue Procedure 89-67.

The amount of travel expenses will be substantiated if the travel reimbursement does not exceed the federal per diem rate for the area of travel. Recognizing that there are many different federal per diem rates across the country, the revenue procedure provides for a simplified alternative. employers may use a per diem rate of $130 per day for 29 high cost areas and $88 per day for all other areas.

Revenue Procedure 90-59 relating to mileage allowances and Revenue Procedure 90-60 relating to per diem and meal allowances will appear in Internal revenue Bulletin 1990-52, dated Dec. 24, 1990.

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