The IRS released on December 3 the standard mileage rates for use in 2011 (Notice 2010-88). The optional standard mileage rates can be used by taxpayers to calculate the deductible costs of operating an automobile.
For business use of an automobile after December 31, 2010, the rate is 51 cents a mile; for medical or moving expenses, 19 cents a mile; and for services to charitable organizations, 14 cents a mile. For tax year 2010, the rates were 50 cents, 16.5 cents and 14 cents, respectively.
Rather than using the standard mileage rates, taxpayers may instead use their actual costs, if they maintain adequate records and can substantiate their expenses. In Rev. Proc. 2010-51, also issued December 3, the IRS provides the rules for substantiating these amounts.
The notice also gives the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate (22 cents a mile in 2011) and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate plan ($26,900 for automobiles and $28,200 for trucks and vans).
The IRS also announced that it will stop issuing an annual revenue procedure to update the standard mileage rates and will instead “publish modifications as required” in a separate notice. Rev. Proc. 2010-51 will remain in effect until superseded by later guidance.
Rev. Proc. 2010-51 prohibits a taxpayer from using the business standard mileage rate to compute the deductible expenses of five or more automobiles a taxpayer owns or leases and uses simultaneously. The IRS has requested comments on this issue. Comments should be made by March 31, 2011, and can be sent to Notice.Comments@irscounsel.treas.gov, with Notice 2010-88 in the subject line.