Mileage Reimbursement For Founder

[Dallas]

Dear Mr. Mechanic,

I am a founding officer and member of the board for a 501(c)3 dog rescue.  I am also the chief cook and bottle washer, because we don't have money to pay an employee.  I put a lot of miles on my car transporting to and from fosters and adopters, doing home inspections, etc.  Am I allowed to use the business mileage rate?  All my miles involve tasks that are critical to saving the dogs.

Thank you, Lori

[Constant]

The charitable rate of 14 cents only refers to unreimbursed

expenses. Many people are confused about that and the IRS does not

explain it well, but we only see that 14 cent rate mentioned in the

Code or Regulations athttp://snipurl.com/dqqw4

which is Section 170 of the Internal Revenue Code that deals only

with charitable deductions(for, example for unreimbursed expenses

on behalf of charities), not with reimbursements.

You may be treated by the IRS, for your work as an officer of the 501(c)(3) organization an employee, as generally officers are employees.

See www.irs.gov/pub/irs-pdf/p15a.pdf on the bottom of page 4,

first column. "An officer of a corporation is generally an

employee."

As the IRS writes at:

www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf on page 72-73

(it generally takes a while to load as it is a 91 page pdf file):

--start of excerpt  ---

The use of the term "volunteer" generally has no significance in

applying the tax law.... A volunteer is an employee if an entity has the right to direct

and control the volunteer's performance, not only as to the results

to be accomplished, but also as to the methods by which the results

are accomplished.  It is the "right" to control, even if the entity

does not exercise the right, that is important. Many factors in an

employment relationship have to be considered before a decision can

be made as to whether the entity has the right to direct and

control.

If you are, in fact, an employee and not an independent contractor in your duties as officer and chief cook and bottle washer, then the 501(c)(3) organization can arrange reimbursements to you for your mileage. See www.irs.gov/pub/irs-pdf/p535.pdf "Business Expenses"

See Table 11-1 in the middle column of page 40

which has a chart about reimbursements under "Per Diem and Car

Allowances" and "Accountable plan" which the organization should

have.  That section is written for employees but also applies to

volunteers. See the section under "Volunteer Officers/Workers" at

www.irs.gov/charities/article/0,,id=131083,00.html

which is written specifically for Exempt Organizations and refers

to that Publication 535.

---Start of Excerpt--

A plan under which an employee or volunteer is reimbursed for

expenses or receives an allowance to cover expenses is an

accountable plan only if:    *  There is a business connection for the expenses;    *  The employee/volunteer adequately accounts for these

expenses within a reasonable period of time; and    *   The employee/volunteer returns any amounts of excess

expenses within a reasonable period of time.

---End of Excerpt-- Details as to the Accountable plan start on page 40  of that

Publication 535.  Those instructions refer to the "standard mileage rate" which is what you call the "business rate".  

Harvey Mechanic, Attorney at Law - [email protected]