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IRS Lowers Mileage Rate by One-Half Cent to 53.5

The Internal Revenue Service (IRS) has announced a decrease of its optional standard mileage reimbursement rate for an employee’s business miles from 54 cents to 53.5 cents, effective January 1, 2017.

The government bases its standard mileage rate on an annual study of fixed and variable automotive operating costs, including insurance, repairs, maintenance and fuel.

Under California Labor Code section 2802, employers must reimburse employees for all actual work-related expenses necessarily incurred.

According to California’s Division of Labor Standards Enforcement’s Enforcement Policies and Interpretations Manual (p.102), using the IRS mileage reimbursement rate will satisfy an employer’s reimbursement obligation absent evidence demonstrating otherwise. For example, if the employee can show the IRS reimbursement rate does not cover all of his/her actual and necessary business-related vehicle expenses, the employer must pay the difference.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

December 16, 2016