The IRS has issued the 2013 optional standard mileage rates. The standard mileage rate for business miles driven will increase 1 cent, from 55.5 cents per mile to 56.5 cents per mile.

Beginning on January 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 56.5 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The medical and moving rate is also up 1 cent per mile from the 2012 rate.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Employers that use the IRS standard mileage rate to reimburse employees may deduct the reimbursement as a business expense. If employers use the approved rate (or a lower rate), the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses.

Employers that use the IRS standard mileage rate to reimburse employees may deduct the reimbursement as a business expense. If employers use the approved rate (or a lower rate), the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses.

Source: IRS Notice 2012-72

Be prepared for 2013. With the IRS increasing its 2013 auditing budget by more than 7 percent, and recent legislation affecting employer compliance, it’s clear that government agencies are cracking down on pay policies and procedures across the board.

Stay in compliance and get up-to-date on the most recent developments by attending BLR's 2013 Payroll Taxes Explained Webinar on December 13.