The Elements of an IRS Compliant Mileage Log

When you’re listing all of the most important factors of keeping your business running, maintaining mileage logs for reimbursement might not enter your top five. But while mileage logs aren’t the most glamorous or the most obvious aspect of running a successful business, that doesn’t mean they’re not important! For organizations whose employees use their personal vehicles to travel as part of the day-to-day of fulfilling their work responsibilities, making sure that every employee keeps an IRS compliant mileage log is absolutely crucial. 

In this article, we’ll discuss the key elements of an IRS compliant mileage log, the risks of noncompliance, and strategies for making sure that employees’ mileage records are the best they can be. Let’s get started! 

Key Elements of a Mileage Log (According to the IRS)

So, what exact elements go into an IRS compliant mileage log? The main three elements of a compliant log are:

• Purpose: The trip mileage being logged must be business-related, as commuting mileage and mileage racked up during side trips is not eligible for reimbursement. 
• Timeliness: All business mileage must be logged and submitted soon after the trip is completed. Logging a trip a few months after it occurred isn’t going to cut it here. Generally, while the IRS prefers that trips be logged as soon after the fact as possible, weekly records updates are usually sufficient. 
• Accuracy: Accuracy is everything in a mileage log. Reported mileage should be eligible, and the entry should include accurate accounts of the number of miles traveled, the time and date of each trip, and its business purpose. 

Every IRS compliant mileage log must contain the above information in order for reimbursement to be considered accountable, or nontaxable. However, the IRS has no strict rules about the format used to keep mileage log records. Eligible formats include paper records, electronic spreadsheets, or through the use of mileage logging apps and software. 

What Can Employees and Employers Do to Ensure Accurate and Complete Records?

The rules for maintaining an IRS compliant mileage log are pretty simple, but like most things, keeping timely, accurate, organized mileage records is easier said than done. Here are some things to remember when making sure mobile employees’ mileage logs are compliant with IRS regulations.

Organization is Everything 

Organization is a major component of making sure employee mileage logs are timely, accurate and organized. Individual employees should make sure their mileage logs are well organized. They can achieve this by entering trip information as quickly as possible after completing work trips, using the same format every time they log information, and ensuring that all mileage numbers they enter are always correct – and, if applicably, that trip mileage is correctly calculated. 

However, organization shouldn’t just be practiced and observed on an individual level, either! To ensure accurate and complete records, employers and management should create organized, streamlined processes and workflows to be certain that logs are correctly filled out and submitted, so that employees can be reimbursed for their travel without incurring the wrath of the IRS.

Communication is Key 

Another way to make sure that each and every mobile employee in your workforce keeps an IRS compliant mileage log is by communicating all relevant guidelines and procedures to those employees as clearly as possible. Employees should understand how much they have to gain from maintaining accurate, organized and compliant mileage logs; not only will they get reimbursed faster for their travel mileage, but the legitimacy of their reimbursement claims will be less likely to get called into question.

What Happens if You’re Non-Compliant?

So what happens if your company’s mileage records don’t meet the IRS standards for logs? Well, you might find yourself in hot water in a number of ways.

Financially

If employee logs don’t meet IRS regulations, then you run the risk of incurring legal consequences, which usually come in the form of hefty fines. Plus, if your logs don’t meet the requirements necessary for the IRS accountable plan, then reimbursement will be subject to taxation, and additional penalties on every mobile employee in your workforce are sure to add up.

Time

It takes time and energy to track down and correct lost, misplaced, or inaccurate mileage records. Additionally, if the IRS decides to audit your records, that’s more time and energy you’ll need to use to prove an audit trail – which is a lot harder to do with unorganized, noncompliant mileage logs.

Accountability

When employees know that they won’t be held accountable for providing accurate, timely mileage records, they may be more likely to enter incorrect information, try to receive reimbursement for ineligible travel (such as commuting miles), or simply not complete or submit their logs at all. 

There’s an App For That

Obviously, the stakes for keeping compliant mileage logs are high. But you’re not alone! As businesses rely on increasingly remote and mobile workforces, technological solutions for accurate mileage tracking have made it easier to digitally maintain IRS compliant travel mileage records.

By utilizing mileage tracking and logging apps, your organization gains the ability to automate everything, from data entry, to report submission, to customizable approval workflows. These apps also tend to use GPS and other advanced forms of mileage tracking, which ensures that numbers are as accurate as possible. They also ensure that information is logged quickly, accurately, and efficiently, without putting the burden of manual entry on your employees, so they can focus on actually doing their jobs. Automating the process of mileage reimbursement will also greatly streamline it, ensuring that employees can rely on receiving the most accurate payments as quickly as possible.

Compliant Mileage Logs Made Easy with CompanyMileage

Looking for a better way to make sure employee mileage logs are compliant with IRS guidelines? CompanyMileage has you covered! Our mileage tracking software solution, SureMileage, uses a unique method called point-to-point calculation, in which the starting and ending points of a work-related trip are taken and used to calculate the best route for mileage reimbursement from there. Employees just have to quickly check in throughout the day and at the end of the workday organize and submit trips for reimbursement using their smartphones. SureMileage tracks all relevant time, date, and purpose and location information so your business will be good to go when the IRS comes-a-calling. 

An IRS compliant mileage log is an important element of your business, but it doesn’t have to be something that’s hard to achieve! To learn more, contact CompanyMileage for a demo today.