Wednesday, July 20, 2011

IRS vs GSA Standard Mileage Rates

Go Here to View the 2012 Update.

By now, most everyone is aware that the IRS upped the standard mileage rates from 51 cents to 55.5 cents effective July 1, 2011. GSA (General Services Administration) however, did not. On their website, GSA states:

The IRS recently announced an increase to the standard automobile mileage rate from 51 cents to 55.5 cents effective July 1, 2011. Although the results of our internal evaluation do not support a change at this time, we plan to monitor the fuel costs monthly and will adjust the rate if warranted. Any adjustments will be posted in the Federal Register and on this web site.

This is an important distinction for contractors who have tied their own reimbursement policies and procedures to one or the other or, who might have contracts that require them to implement provisions of the FTR (Federal Travel Regulations). While the FTRs apply to Government employees, many contractors have tied their own policies and procedures to the FTR rules for expediency.

Many people mistakenly believe that the IRS and GSA rates are the same. Usually they are (with GSA often lagging a bit behind the IRS on the effective date), but not always. We are now in a period when they are not the same. Implementing the IRS rate when an internal travel policy is tied to the GSA rate could throw a contractor into a noncompliance situation.

The Federal Acquisition Regulations (FAR) do not require contractors to use a particular reimbursement rate. FAR 31.205-46 only requires that the method used to reimburse employees for business use of their privately owned vehicle "results in a reasonable charge". Based on this, both the IRS and the GSA would be presumptively reasonable.

No comments:

Post a Comment