A mileage log is a company’s record of the mileage driven in each of their vehicles. The main reason why companies should have a mileage log is because of the possibility of an Internal Revenue Service (IRS) audit. According to the IRS, an IRS audit is a review of a company’s accounts and financial information to make sure that such information is correct and to verify that the reported amount of tax is correct.
Therefore, in case of an IRS audit, companies should have a detailed record of the mileage of each trip, for each vehicle. Although it may seem tedious, some companies that merely estimate the mileage they use for their business may lose a significant amount of tax deductions. Tax deductions are important because they allow companies to save money by reducing their taxable income.
[Last updated in July of 2021 by the Wex Definitions Team]