[StBernard] IRS raises the amount deductible for mileage

[Westley Annis]

IRS raises the amount deductible for mileage 
Agency cites spike in the cost of gasoline as reason for increase
The Associated Press
updated 4:49 p.m. CT, Mon., June. 23, 2008
WASHINGTON - The Internal Revenue Service, citing the drain that high gas
prices are having on people's finances, said Monday it is raising the
automobile mileage rate that businesses and others can claim.

The tax agency said the optional standard rate to calculate deductible
operating costs for business vehicles will rise from 50.5 cents a mile to
58.5 cents for the final six months of 2008.

That rate also applies to businesses and others entitled to depreciation
allowances that operate automobiles for charitable, medical or moving
purposes.

"Rising gas prices are having a major impact on individual Americans," said
IRS Commissioner Doug Shulman. "Given the increase in prices, the IRS is
adjusting the standard mileage rates to better reflect the real cost of
operating an automobile."

Shulman, in an interview, said the agency has been keeping an eye on gas
prices since 2005 when there was a spike in prices following Hurricane
Katrina. He said officials wanted to get the guidance out on the new rate so
businesses can do midyear adjustments on July 1.

The IRS said it was also changing the rate for computing deductible medical
or moving expenses from 19 cents to 27 cents a mile for the final six months
of the year. That applies to individuals not entitled to depreciation
allowances.

Congress must enact legislation to change the rate for providing services
for charitable organizations, so that will stay at 14 cents a mile.

The IRS normally updates the mileage rates once a year in the fall for the
next calendar year.

"This is welcome news for a lot of folks out there. There's no question that
the cost of operating a vehicle has risen exponentially due to the dramatic
increase in gas prices," said Sen. Norm Coleman, R-Minn.

Coleman last week sent a letter to Shulman and called him to urge that the
rate be increased to better reflect rising transportation costs.

Coleman said he talked to Shulman again Monday and "he said that these are
certainly unusual times, these are volatile times, and it requires that we
act nimbly and quickly."


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URL: http://www.msnbc.msn.com/id/25335751/