Grassley Wins Commitment to Fix Charity Mileage Problem in Stimulus Bill
WASHINGTON – Sen. Chuck Grassley has won a key commitment from
colleagues to work to fix a charitable mileage reimbursement problem via the economic
stimulus bill working through Congress.
“Volunteers driving for charity are short-changed on reimbursement,” Grassley
said. “The tax code allows deductions for reimbursement at 1984 levels. Meanwhile,
every other kind of motoring expense is treated at 2009 levels. If we want to encourage
volunteerism, we need to bring charitable driving rules into the current century. The
stimulus focuses on paying jobs, but the non-paying jobs are just as important for a strong
society, especially providing help in an economic crisis.”
As ranking member of the tax-writing Finance Committee, Grassley sought to
offer an amendment on the mileage fix during the committee’s consideration of its piece
of the economic stimulus bill earlier this week. He withdrew the amendment after
receiving a commitment from fellow senators, including Sen. Max Baucus, chairman, to
address the mileage fix in the legislation when it reaches the Senate floor, expected next
week.
Grassley explained to the committee that the federal tax code restricts a charity
from reimbursing its volunteer drivers more than 14 cents a mile because those drivers
have to pay taxes on any amount in excess of 14 cents per mile. For those drivers who
don’t receive reimbursements from a charity but may be able to take a deduction for
charitable miles driven, the tax code also limits that deduction to 14 cents a mile. The 14
cent rate is fixed in the tax code and has been for over 10 years.
In contrast, IRS currently has the discretion to adjust the reimbursement and
deduction rates for miles driven for business, medical or moving purposes. But IRS has
not had the discretion to set the rate for charitable miles driven since 1984. So even
though the price of gas was steadily increasing all last year, volunteer drivers continued
to receive the same low rate while those driving for business, medical or moving
purposes received the benefit of the IRS adjustments, Grassley said.
Charities in Iowa, such as Meals on Wheels and Big Brothers/Big Sisters, saw a
noticeable decline in volunteers last year, Grassley said. Since Iowa is a largely rural state
where cities are far apart, volunteers in rural areas often have to drive further than their
urban counterparts to fulfill their volunteer commitment.
“While gas prices may be low now, these charities are still facing a shortage of
volunteers since many of these volunteers are affected by the economic crisis,” Grassley
said. “Unfreezing the charitable mileage rate allows those charities that are on the front
lines of the economic crisis to provide some incentives to volunteers. Giving the IRS the
discretion to change the charitable mileage rate is a no-brainer from a tax policy
perspective.”
Grassley is a co-sponsor of the Giving Incentives to Volunteers Everywhere Act of
2009 (GIVE Act), introduced in the Senate on January 14, 2009. Other committee
members Senators Schumer, Snowe, Ensign and Cantwell co-sponsored the GIVE Act,
and Senators Schumer and Ensign co-sponsored Grassley’s amendment.
A description of Grassley’s earlier effort on this issue follows here.
M E M O R A N D U M
To: Reporters and Editors
Fr: Jill Gerber for Sen. Grassley, 202/224-6522
Re: Mileage deduction for charitable purposes
Da: Tuesday, Sept. 2, 2008
Sen. Chuck Grassley, ranking member of the Committee on Finance, today
announced he will support legislation to update the deductible cost of operating a vehicle
for charitable purposes. The Internal Revenue Service (IRS) has the authority to change
the standard mileage rates for computing the deductible costs of operating an automobile
for business, medical, or moving expenses. However, the agency does not have the
authority to change the mileage rate for calculating the deductible cost of operating a
vehicle for charitable purposes. Grassley plans to co-sponsor the Fair Deal for
Volunteers Act of 2008 (S. 3246), introduced by Sens. Benjamin Cardin, Barbara
Mikulski and Olympia Snowe. Pending in the Finance Committee, the bill restores to the
IRS the ability to set the mileage rate for charitable purposes. The IRS had this discretion
prior to the Deficit Reduction Act of 1984, when the charitable mileage reimbursement
rate became fixed in statute. Grassley made the following comment on his support of the
legislation.
“People who volunteer for charity aren’t out to make money, but they shouldn’t
lose a lot of money in the process. Driving a car is more expensive than ever, and driving
is critical to a lot of volunteer activities. With high gas prices, some people might decide
they can’t afford to deliver meals to the homebound. It makes sense to give the IRS the
flexibility to set mileage rates for charity work. The IRS already has the authority to set
mileage rates for business, medical, or moving expenses. This legislation will encourage
volunteering and streamline this piece of tax administration for taxpayers. It also makes
sense to allow charities to reimburse volunteers at the same rate as business expenses
without creating taxable income for volunteers. I encourage my colleagues to consider
adding this provision to the bill. ”
Following is information on the Fair Deal for Volunteers Act (S. 3246).
Sponsor: Sen Cardin, Benjamin L. [D-MD] (introduced 7/10/2008) Cosponsors: 4
Committees: Senate Finance
Related Bills: H.R.2020, H.R.6283, H.R.6368, S.1220, S.3032, S.3421, S.3429
Latest Major Action: 7/10/2008 Referred to Senate committee. Status: Read twice and referred
to the Committee on Finance.
COSPONSORS, ALPHABETICAL [* = original cosponsor]:
Sen Cantwell, Maria [D-WA] - 7/31/2008 ,Sen Leahy, Patrick J. [D-VT] - 7/31/2008, Sen
Mikulski, Barbara A. [D-MD] - 7/10/2008 *, Sen Snowe, Olympia J. [R-ME] - 7/10/2008
*
By Mr. CARDIN (for himself, Ms. SNOWE, and Ms. MIKULSKI):
S. 3246. A bill to amend the Internal Revenue Code of 1986 to allow the Secretary of the
Treasury to set the standard mileage rate for use of a passenger automobile for purposes
of the charitable contributions deduction; to the Committee on Finance.
Mr. CARDIN. Mr. President, I rise today to introduce a bill, the Fair Deal for Volunteers
Act. In today's economic climate, Americans need relief from sky-rocketing oil and gas
prices. This applies to everyone, including people who engage in much-needed volunteer
work. My bill will provide immediate relief for volunteers serving our elderly, poor, frail,
and at-risk Americans. It gives the Internal Revenue Service authority to change the
mileage rate--currently set by statute at 14 cents per mile--for calculating the deductible
cost of operating a vehicle for charitable purposes. We can't let an out-of-date mileage
rate exacerbate the pinch at the pump for volunteers who selflessly provide so many vital
goods and services in every community across America. I'm pleased that the senior
Senator from Maine, Senator Snowe, and my colleague, the senior Senator from
Maryland, Senator Mikulski, are original cosponsors of this bill and I thank them for their
support.
The Internal Revenue Code does not fix a rate for individuals who are required to use
their own vehicle for work, or for individuals taking a mileage deduction for moving
purposes. The IRS is able to increase the deduction amount for these purposes to reflect
the current economic climate and dramatically higher fuel prices. This is exactly what the
IRS recently did.
As of July, the IRS modified the standard mileage rates for computing the deductible
costs of operating an automobile for business, medical, or moving expenses. The revised
standard mileage rate for business purposes increased from 50.5 cents per mile to 58.5
cents. For medical and moving expenses, the IRS increased the rate from 19 cents per
mile to 27 cents per mile. I think the Nation's volunteers who travel on behalf of
charitable organizations deserve an increase in their mileage rate, too.
My bill gives the IRS flexibility in setting the rate so that volunteers for charitable
organizations could be given the same tax benefit accruing for moving, medical, and
business expenses. In today's climate of increasing food and fuel prices, this bill will help
relieve some of the pressure on charitable organizations and their volunteers.
Take Meals on Wheels, for example. This organization delivers nutritious meals and
other nutrition services to men and women who are elderly, homebound, disabled, frail,
or otherwise at-risk. The services Meals on Wheels provides significantly improve the
recipients' quality of life and health, and often help to postpone institutionalization.
Over the past year, there has been nearly a 20 percent increase in fuel and food prices,
coupled with reduced government funding and fewer donations across the country.
Nearly 60 percent of the estimated 5,000 programs that operate under the auspices of the
Meals on Wheels Association of America have lost volunteers, in large part because it is
too expensive for the volunteers to drive back and forth. Nearly half the programs have
eliminated routes or consolidated meal services. About 38 percent of the programs have
switched to delivering frozen meals, and about 30 percent are cutting personal visits from
5 days a week to one.
In Maryland, the Central Maryland Meals on Wheels has experienced an increase of 7
percent in food costs and suppliers are charging higher delivery fees. The cost to fill up
the vans with gas has increased. Fuel costs averaged $72,538.70 in fiscal year 2007; this
year, the costs have jumped to $86,790.63. This is an organization with volunteers
serving over 3,100 elderly, disabled, frail and at-risk Marylanders. Its volunteers deserve
relief from high gas prices just as much as people who use their car for work or for
medical purposes or for moving.
Throughout the United States, Meals on Wheels served over 3 million people and more
than 250 million meals in fiscal year 2006. This is just one of thousands of charitable
organizations. We need to encourage and support the Meals on Wheels volunteers and all
other volunteers who need their cars to help their neighbors and communities. The Fair
Deal for Volunteers Act will do just that, and I hope my colleagues will support it.
Mr. President, I ask unanimous consent that the text of the bill be printed in the
RECORD.
There being no objection, the text of the bill was ordered to be printed in the RECORD,
as follows:
S. 3246
Be it enacted by the Senate and House of Representatives of the United States of America
in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fair Deal for Volunteers Act of 2008''.
SEC. 2. DETERMINATION OF STANDARD MILEAGE RATE FOR
CHARITABLE CONTRIBUTIONS DEDUCTION.
(a) In General.--Subsection (i) of section 170 of the Internal Revenue Code of 1986
(relating to standard mileage rate for use of passenger automobile) is amended to read as
follows:
``(i) Standard Mileage Rate for Use of Passenger Automobile.--For purposes of
computing the deduction under this section for use of a passenger automobile, the
standard mileage rate shall be the rate determined by the Secretary.''.
(b) Effective Date.--The amendment made by this section shall apply to miles traveled
after the date of the enactment of this Act.
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