March 29, 2007

WASHINGTON, DC – Representative Tom Petri introduced legislation Thursday to cut taxes on people who drive their cars in the course of charitable work.

"Today, when you drive your personal vehicle on a business errand your employer can reimburse you for the expense of using your personal car for a business job at the rate of 48.5 cents per mile," Petri explained. "If you drive your personal car to deliver Meals-On-Wheels to an elderly neighbor or do some other charitable work, the charity can reimburse you, but if they reimburse you that same 48.5 cents, most of it will be taxed by Uncle Sam."

"I think that's discriminatory and unfair," he said. "It discourages volunteer activity. And that's why I've introduced legislation to allow that when people do charitable work, they are treated the same as when they are working for profit."

Petri further explained that his Charitable Driving Tax Relief Act will equalize the tax treatment of charitable reimbursements with those received for business driving because the point of the payment is essentially the same, that is, to cover the cost of operating a personal vehicle while performing an important service in the pursuit of a greater good.

To achieve this end, he said that his legislation would exclude from gross income any reimbursement received for the use of a volunteer's car while assisting a charitable group, limited only by the cap the Internal Revenue Service sets each year regarding business driving. This treatment would be available only for services provided without compensation and drivers would be required to maintain sufficient records to substantiate the charitable use of their vehicles.

Finally, this bill 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.