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IRS plays nice? Gasoline prices prompt switch
Las Vegas Review-Journal
10/19/2005
Oct. 19--Even the Internal Revenue Service recognizes the price of
gasoline is proving painful for drivers.
The IRS recently boosted the allowance for business travel to 48.5 cents
a mile from 40.5 cents for the last four months of the year.
The decision will affect many across the Las Vegas Valley.
Tricia Zamecnik, a self-employed real estate agent, expects to benefit
from the ruling. Zamecnik figures she drives 100 to 200 miles every day as she
shows houses for sale around the valley. She could keep receipts for all
expenses, but many workers consider mileage a less burdensome way to calculate
tax deductions.
Anna Siefert, operations manager of the Nevada Micro Enterprise
Initiative, said microbusinesses such as Zamecnik's typically should use
mileage, rather than receipts to calculate deductions. Mileage works better,
Siefert said, because microbusiness owners almost always use their vehicles
for personal purposes as well as business.
Employers who require workers to use their own vehicles for business can
increase the amount that they compensate those workers to 48.5 cents. But
employers are not required to pay the maximum rate.
State employees, and workers with the political subdivision of Clark
County, are getting the old, lower rate. The Nevada Board of Examiners, which
includes Gov. Kenny Guinn, has not considered increasing the mileage rate to
48.5 cents, said Steve George, a spokesman for Guinn.
However, the Clark County School District has increased its mileage rate
to 48.5 cents, accounting coordinator Margot Suarez said.
Nevada Power Co., which employs 1,700 workers, pays the maximum to
workers who use their vehicles for company business. Often workers assigned to
remote sites such as power plants use their own cars to drive to company
headquarters, spokeswoman Sonya Headen said.
The law firm Lionel Sawyer & Collins also pays the maximum allowed, human
resource manager Rebecca Pamias-Sellers said. So does the Howard Hughes Corp.,
spokesman Tom Warden said.
Nevada State Bank, which 830 workers, also has increased its rate to 48.5
cents, Chief Executive Officer Bill Martin said.
But the decision has caused Martin to reflect. He remembers getting 10
cents a mile for using his 1964 Plymouth Fury while working as a federal bank
examiner in Southern California during the '60s if he brought a second federal
employee with him. The rate was only 6 cents if he drove alone.
"There was always a big fight over who would get to drive (and pocket the
compensation)," he said.
Martin, however, recognizes that the days of cheap gasoline are history.
Some Nevada Bank employees spend $400 to $500 a month on gasoline to commute
to work, he said.
While 48.5 cents may seem like a lot of money to many drivers, it still
doesn't cover the cost of driving a typical vehicle, said Sean Comey, a
spokesman for AAA Nevada.
AAA conducted a national study in March of the typical cost of operating
a car and concluded that an owner of a midsize car was spending about 56.1
cents per mile. That is a conservative estimate, Comey said, because it's
based on national average, which is lower than gasoline prices in Nevada, and
because it was done in March when gasoline prices were lower around the
country.
The IRS cited the increase in gasoline prices in raising the mileage
rate, but IRS Commissioner Mark Everson said the maximum rate may be lower
next year.
"Fuel is certainly not an insignificant cost," Comey said.
Yet, automobile depreciation, insurance and maintenance are even bigger
expenses.
"You're losing your money by using your car for work purposes," Comey
concluded. "People get hit for the cost of a vehicle every time they turn
around."
Zamecnik, a real estate agent with Exit Realty Unlimited, may feel the
higher costs acutely. She decided she deserved a luxury vehicle and switched
from a midpriced car to a Mercedes. Trouble is, the new car costs more to
operate. She was spending $150 to $200 a month for gasoline in her old car,
and spent $400 last month on gasoline for the Mercedes.
"I worked very hard to get it," she said. "My car is my office. I work
out of my car literally."
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