David R. Heinen and Nathaniel H. Goetz
One of the most unfortunate consequences of increased fuel costs is that fewer people can afford to volunteer with nonprofits that provide essential services.
Many organizations rely on volunteers to deliver meals to the elderly, tutor in rural communities, transport children and disabled clients to medical appointments, and travel to nonprofit boards to provide accountability and oversight for charitable organizations.
Unless Congress acts now to correct tax laws that place an unfair burden on volunteers, these nonprofits are going to have an increasingly difficult time providing these vital services.
Volunteers contribute generously from their time and money to help nonprofits in their communities.
Federal tax law makes these volunteers pay even more for their service by excluding them from basic tax benefits that are available to individuals who drive for business purposes.
Congress allows companies, governments and nonprofits to reimburse employees at a standard business mileage rate set by the Internal Revenue Service without counting this reimbursement as taxable income.
This summer, the IRS increased the standard business mileage rate by eight cents to 58.5 cents per mile, reflecting the realistic cost of operating a vehicle.
Unfortunately, volunteers who itemize their taxes can deduct only 14 cents for every mile they drive as part of their service to nonprofits.
This covers only a small fraction of the money volunteers actually spend on driving-related expenses.
Some nonprofits try to attract volunteers by reimbursing them for the miles they drive performing their service. However, volunteers must pay taxes on any reimbursement greater than 14 cents per mile.
This low volunteer mileage rate, which is set by statute and not adjusted by the IRS, suggests that we place a significantly lower value on volunteer service than business enterprises.
But there is hope that Congress may soon act to eliminate this unfair tax penalty for volunteers.
On August 1, Democratic U.S. Sen. Chuck Schumer of New York and Republican U.S. Sen. John Ensign of Nevada introduced the Giving Incentives to Volunteers Everywhere Act, which would help reduce the impact of gas prices on volunteers.
It is expected that the GIVE Act also will be introduced in the House of Representatives when Congress returns from its recess in September.
The GIVE Act would help volunteers in two important ways.
First, it would set the volunteer mileage rate at 70 percent of the current standard business rate.
This means volunteers could deduct 41 cents for every mile they drive for a nonprofit.
If gas prices continue to rise, and the IRS increases the standard business mileage rate even further, the volunteer mileage rate would increase proportionally.
The act also would allow nonprofits to reimburse volunteers at the standard business mileage rate without taxing the volunteers on the amounts that they are reimbursed.
To help prevent nonprofits from losing many of the volunteers who serve our communities, it is essential that Congress pass the GIVE Act as soon as possible.