Tax Byte
GPS Tracker Doesn’t Work Alone to Get Deduction for Tax Preparer (Patricia Chappell v. Comm., TCS 2024-2)
Patricia Chappell used MileIQ to track her location from March 23 to December 15, 2015. From the app, she entered whether trips were business or personal. MileIQ summarized Ms. Chappell’s tracking information and provided a log that could be used to help substantiate her business miles driven during the year. Ms. Chappell’s driver’s license was suspended for about six months in the middle of 2015. During that time, she used a driver. In a close examination of her records, there were inconsistencies in dates and purchases. There were several days on which gas was purchased multiple times, but no excessive number of miles were recorded by MileIQ. Her records showed one day on which there was a fuel purchase recorded in Ohio when MileIQ, and an updated mileage log indicated that Ms. Chappell was in Washington, D.C. attending an IRS conference. The updated mileage log included a “business purpose” column which was inconsistently completed.
Auto expenses are allowable when property substantiated:
Substantiation rules, discussed above, are strict when applied to listed property such as cars. While Ms. Chappell may have been able to substantiate mileage and percentage business use through the use of an app, the court was not convinced that her expenses were accurate. With lack of faith in the expense records, the Court fell back on the standard mileage rate. They allowed a portion of the automobile expense claimed using the cents per mile calculation, along with the modified mileage log that included the business purpose of the trip.
Tax Practitioner Planning:
Tax preparers are held to a higher standard by the IRS and the courts. We should know the rules and obey them.