IRS laws on mileage for volunteers need to change

From David R. Heinen, director of public policy and advocacy for the N.C. Center for Nonprofits in Raleigh:

Nearly everyone feels the effects of high gas prices. One unfortunate consequence is that fewer people can afford to volunteer for nonprofits that provide essential services throughout North Carolina.

Many organizations rely on volunteers to deliver meals to the elderly, tutor in rural communities, take children and the disabled to medical appointments, and other activities. Without this vital volunteer support, those who receive the services are in serious jeopardy. As an uncertain economy lingers, demand for services is rising. Yet tax laws put an unfair burden on volunteers. Unless Congress acts now, nonprofits and the communities they serve will continue to lose out.

Volunteers contribute generously in time and money. Federal tax law makes these volunteers give even more. It excludes them from basic tax benefits available to people who drive for business purposes. Companies, governments and nonprofit groups may reimburse employees at a standard, IRS-set business mileage rate – this summer it was raised 8 cents, to 58.5 cents a mile. This reimbursement isn't counted as taxable income.

Yet volunteers can deduct only 14 cents per mile driven for nonprofits. That covers only a fraction of their driving-related expenses. Some nonprofits reimburse volunteers for the miles they drive, but the volunteers are taxed on any reimbursement greater than 14 cents a mile. This low rate is set by statute, not the IRS. It says we value volunteers' service much lower than business enterprises.

But there is hope Congress may act to eliminate this unfair penalty for volunteers. On Aug. 1, Sens. Charles Schumer, D-N.Y., and John Ensign, R-Nev., introduced the Giving Incentives to Volunteers Everywhere (GIVE) Act, which would help reduce the impact of gas prices on volunteers. It is expected to be introduced in the U.S. House this month.

The act would set the volunteer mileage rate at 70 percent of the standard business rate. At the current business rate, volunteers could deduct 41 cents for every mile driven for a nonprofit. The act would also let nonprofits reimburse volunteers at the standard business rate without taxing volunteers on the reimbursements.

The N.C. Center for Nonprofits has joined in a national coalition of organizations supporting the GIVE Act. Let your members of Congress know how volunteers serve your community every day.