Senate Votes to Repeal IRS Rules on Mileage Logs

The Senate gave final approval and sent to the White House on Thursday legislation to repeal Internal Revenue Service rules that taxpayers must keep detailed mileage logs if they want a tax deduction for using their cars for business.

The rules--strongly criticized by taxpayers--also cover home computers when used for business purposes.

The Senate approved the compromise measure by voice vote. The House adopted the legislation last week, 426 to 1, and President Reagan has indicated that he will sign it.

Each Time Car Was Used

The original record-keeping regulations, which took effect in January, required taxpayers to record each time they used their cars and home computers for business in order to qualify for a tax deduction.

Angry constituents, particularly farmers and small businessmen who often use personal vehicles for business, flooded Congress with mail complaining about the new load of paper work.

It marks the second recent case of Congress backing off in controversial tax legislation. The lawmakers also repealed withholding by banks and brokerage houses of a portion of taxes due on interest and dividends.

The legislation allows taxpayers to revert to the former practice of providing substantiating evidence that use of a car or business equipment was necessary for business reasons.

Specific Questions

Beginning with the tax returns filed for 1986, such write-offs will be subject to a list of specific IRS questions to determine what deductions qualify.

The bill also exempts certain special-purpose vehicles from any record-keeping requirements, including school buses, marked and unmarked police and fire vehicles, cement trucks, hearses, ambulances, moving vans and heavy trucks.

To offset the expected revenue loss from the repeal, the bill curbs the tax benefits of corporate ownership of luxury cars. It reduces the maximum investment tax credit from $1,000 to $675 and the maximum amount that can be depreciated the first year to $3,200 instead of $4,000.