Background. Each year the IRS announces a new "standard business mileage rate" that can be used by taxpayers to compute a deduction for the business use of a vehicle. This rate also can be used by employers to reimburse workers' substantiated business miles under an accountable expense reimbursement arrangement. The standard mileage rate is an important concept for church treasurers, since many churches reimburse staff members' business miles using this rate.
Example. Pastor Dave owns his car and kept records throughout 2006 showing that he drove the car a total of 15,000 miles, of which 7,000 miles were for business purposes. Pastor Dave submitted records to the church treasurer each month documenting business miles driven for the previous month, and he was reimbursed at the standard mileage rate. The standard business mileage rate for 2006 was 44.5 cents per mile. As a result, Pastor Dave received reimbursements of $3,115 (44.5 cents per mile x 7,000 miles).
The standard business mileage rate for 2007. The IRS has announced that the standard business mileage rate for 2007 is 48.5 cents per mile (up from 44.5 cents in 2006).
Reimbursing business miles using the standard mileage rate. Many churches have adopted an accountable reimbursement arrangement that uses a mileage rate to reimburse business miles driven by employees. Some churches use the IRS approved rate, while others use a rate that is either more than or less than the IRS rate. Listed below is a summary of the rules that apply to a church's use of a mileage rate to reimburse employees' business miles.