Another Win for FAVR

Another Win for FAVR

By Motus August 8, 2022

Categories: Motus News

We have seen significant gas price fluctuations over the past few months. It’s not surprising since gas prices are constantly changing with little fanfare. But any time they spike to all-time highs seemingly overnight, you can bet that people are going to pay attention. Similarly, when the IRS makes a mid-year adjustment to the business mileage standard for the first time in more than a decade, it makes sense that people would have some questions about using a standard rate for something as complex and nuanced as vehicle reimbursement.

Issues With the Standard Reimbursement Rate

Karen O’Byrne, the president and CEO of Motus, recently sat down with Jamie Herzlich at Newsday to talk about some of the issues with using a standard reimbursement rate in a dynamic environment. As the article states, the IRS mileage rate is traditionally updated yearly, and it’s only drastic fluctuations like those we’ve seen over the past few months that will trigger a mid-year adjustment. It stands to reason that any instrument so blunt will struggle to do its job effectively. You don’t want your surgeon operating with a butter knife, and you don’t want to your employer to approach a complex issue like vehicle reimbursement with a plug-and-play rate. Doing so makes it impossible for employers to reimburse workers fairly and accurately.

Finding the Solution with FAVR

That’s why Motus has long championed a Fixed and Variable Rate (FAVR) reimbursement. FAVR reimbursements account for both the fixed and variable costs of vehicle ownership. It is the only fair and defensible approach to reimbursement, which sets it apart from other vehicle programs. It is for those reasons that FAVR is the only methodology recommended by the IRS.

As the Newsday article affirms, the mid-year adjustment to the IRS rate was a welcome change that will help alleviate some pain at the pump for thousands of business travelers. But there are still too many people relying on an outdated methodology that is incapable of delivering fair and accurate results. And while the article refers to the standard rate as “simpler and easier,” that doesn’t have to be the case for your business.

Choosing the Right Partner

With the right solution and technology partner, FAVR mileage reimbursement can be just as easy. It will simplify manual processes with automation, ensure compliance and provide accurate payments, all while controlling costs. If you are interested in learning more about how Motus can help your organization fine-tune your reimbursement program, please contact us here.

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