Today, U.S. Representative Tom Petri (R-WI) introduced legislation--the Charitable Driving Tax Relief Act--to ensure that taxpayers who drive for a charity and are reimbursed for their volunteering receive fair and consistent tax treatment.
Currently, someone who drives their car for business travel can be reimbursed at the full 56.5 cents per mile (which is adjusted by the Internal Revenue Service), and the entire amount is not counted as taxable income. Not so for charitable driving. A volunteer who drives his or her car for charitable work might be reimbursed at the federal rate of 56.5 cents per mile, but for tax purposes, the charitable driving rate is set in law at 14 cents per mile. Therefore, if someone is reimbursed more than 14 cents per mile for charitable driving, they will be taxed on everything over that amount.
"This is inconsistent and unfair," said Petri. "If someone is delivering Meals-On-Wheels or taking someone to the hospital or making any trip as part of a charity, they should be treated the same as they would if they were working for profit.
"The way the tax law is set up currently, it essentially discourages volunteer activity. And that's not the message we want to send," said Petri. "Charitable work is part of our American way of life and it should be encouraged."
Additionally, the Charitable Driving Tax Relief Act would drop the requirement that charitable groups report these reimbursements to the IRS, removing an administrative and paperwork burden that detracts resources from their larger purpose.
In 2008, the House passed legislation which included a limited correction for this disparate treatment, but the Senate failed to act on it.
"There's a lot of talk about the need for comprehensive reform to the tax code, so I'm hopeful that this Congress is the one in which charitable drivers reach the finish line and achieve equitable treatment for their work that benefits the greater good," Petri said.