Reacting to continuing high prices for gasoline, the Internal Revenue Service announced higher standard mileage rates on June 24, 2011. See Announcement 2011-40, http://www.irs.gov/pub/irs-drop/a-11-40.pdf.
The new rates will take effect July 1, 2011. The standard mileage rate for business will be 55.5 cents per mile, up from 51 cents per mile, and the standard rate for moving will be 23.5 cents per mile, up from 19 cents per mile. The rate for use of a vehicle for charity is fixed by statute at 14 cents per mile.
The IRS said it was taking this unusual step because increased gas prices are having a major impact on individual Americans, and so that the reimbursement rate will fairly reflect those prices.
It is unusual for IRS to change the rates in mid-year, but this is the third time in six years it has done so, each time in response to a spike in gas prices. The action comes less than a month after an IRS official was quoted as saying IRS did not intend to raise the mileage rates, and after IRS received a letter from a bipartisan group of 12 House members requesting increases.
Worldwide ERC members will want to incorporate the new rates into their reimbursement programs for transferees. However, members are reminded that if they use the business rate, or some rate higher than the rate for moving, to reimburse transferees for travel at the time they move, the excess over 23.5 cents per mile will be taxable.