Audit Alert #1 – Trip Wire – Mileage Logs

What is one of the most common trip wires to trigger an audit?

CAUTION Audit Alert SignWondering why you got a letter from the IRS?  Could it be your mileage log?  The IRS Is a stickler for details when  it comes to mileage logs.  Did you make sure that your mileage log reflected the day-to-day use and associated expenses for your vehicle(s)?

Whether you are a roadwarrior account manager for a company, or a child care professional – your vehicle log is one of the most important documents you have to maintain – CONSTANTLY.  Don’t think you can fudge it and not end up paying dearly.

Back in February 2010, a man named Mr. Royster¹ went before the IRS to defend his lack of documentation for his vehicle.  In particular, he didn’t have a day-to-day log of his mileage and associated expenses.  Mr. Royster tried to reconstruct his mileage for the previous 12 months, but the IRS determined his reconstruction failed to show the specifics.

Inadequate mileage logs can also create its own set of problems.  Think of it this way; you are giving the IRS a reason to dig deeper into your records.  That can end up costing you dearly and a loss of vehicle deductions.  Take the time to keep good records – it’s worth it in terms of dollars and cents — and peace of mind.

But back to Mr. Roster.  The IRS ended reviewing – and scruitinizing 3 years of his history.  He only had mileage logs for 2004 and 2005 that showed beginning and ending odometer readings for each day.  The court ruled that INADEQUATE.  Consequently, the court gave Mr. Royster ZERO vehicle deductions for 2004 and 2005!

If you have any doubts about your mileage log, feel free to download our free templates.  One is from the Bradford Tax Institute and is a very good excel spreadsheet for calculations.  The other is a simple mileage log – so feel free to modify to your own personal need.

¹Bradford Tax Institute