Clients getting audited for mileage

[jeff501]

Have had two clients audited recently who claimed in excess of 30,000 miles on their 2006 tax returns. IRS wants letters from their employers stating no reimbursement policy was in effect. I've faxed these letters along with copies of log books and they still want more information. Both clients had legitimate mileage deductions.

One is in the construction business who would often travel 75-100 miles each way to the job site from the union hall or after stopping locally to buy materials, etc. An IRS auditor told me during an audit last year that everything is considered mileage once you leave the union hall or after the first stop for work (Lowe's for the contractor for example). I was surprised she would tell me this during the audit.

The other was a salesman calling on clients after reporting to the office each morning. The first client was local and others were scattered across the middle part of the state.

Any one had much success with this recently? Currently it's still in the fax and letter sending stage but I hope this is resolved prior to them filing returns for 2008 and having their refunds held. I've suggested they wait until later in the season to file but of course both want to file early as possible.

[JohnH]

It's important to get these things right.
I ALWAYS go to my office before going to a clients' location and return to the office afterward, even for those clients located right down the street from my home.

[taxmandan]

What additional information do they want?

You sent the logbooks and letters from employers but you didn't say what other info theIRS is asking for. Mileages of those high amounts will be challenged aggressively by theIRS so be prepared.

Daniel

[erchess]

My Case

I have a home office but I use it far more for things unrelated to my business than for things related to my business. The office is so small that the one time I saw a client in my home I took him to my kitchen table. I do my work in the homes and offices of clients. Am I right in my belief that I am not allowed a deduction for mileage or other transportation expenses? I know that if I travel away from the general area of my main tax home overnight I can claim the expenses.

[joanmcq]

Same as anyone else: 1st trip commuting, next client is biz, next biz, etc, trip home commuting.

[Gene V]

I have a home office but I use it far more for things unrelated to my business than for things related to my business. The office is so small that the one time I saw a client in my home I took him to my kitchen table. I do my work in the homes and offices of clients. Am I right in my belief that I am not allowed a deduction for mileage or other transportation expenses? I know that if I travel away from the general area of my main tax home overnight I can claim the expenses.

Here is a previous thread on Home Office and mileage by Bee knees-worthwhile reading

http://www.thetaxbook.com/forums/showthread.php?t=10072

[KarenV]

Log Book

I helped a client with high mileage and the same IRS issue this summer. We sent the requested letter from his employer as well as his log book. All mileage was denied by the IRS because they didn't like his log book. We were told that the log book must follow the format established in Publication 463. The IRS is really getting tough on the mileage issue.

[Lion]

Logs

I gave most of my clients TTB 2008 Mileage Calendars, but don't expect to get back many filled out. In fact, I didn't keep that myself. I still use a paper calendar, a FiloFax, for all my appointments. So, I just add my business mileage right along with the appointment in my FiloFax. I try to remember to push the button for the tripometer to give me the mileage. If I forget, or if I had to use MapQuest to find the location anyway, I write down the MapQuest mileage and even save the MapQuest sheet. But, that's not a formal, starting mileage, ending mileage system. I do have the date, time, location, who, purpose (kinda), and mileage, all together in one place and noted contemporaneously with the actual appointment. I also write down my mileage New Year's Eve. Therefore, I can calculate total mileage and total business mileage easily. My medical mileage doesn't add up to enough to help, but I try to remember to note my charitable mileage, also. How nasty are your mileage audits? What logs have been accepted by the IRS? What were the deficiencies in the logs not accepted? My husband tracks his mileage in his Palm and prints out a sheet at the end of the year. I think the sheet has only dates and mileage and not any other details of the appointments, but his mileage is for going from job one to job two a few days each week repetitively.

[JG EA]

I helped a client with high mileage and the same IRS issue this summer. We sent the requested letter from his employer as well as his log book. All mileage was denied by the IRS because they didn't like his log book. We were told that the log book must follow the format established in Publication 463. The IRS is really getting tough on the mileage issue.

I would really take exception to this. Pub 463 states:

What If I Have Incomplete Records?
If you do not have complete records to prove an element of an expense, then you must prove the element with:

Your own written or oral statement containing specific information about the element, and

Other supporting evidence that is sufficient to establish the element.

Also the form they have in Pub 463 says right on top "THIS IS NOT AN OFFICIAL INTERNAL REVENUE FORM"