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Fuel hike drives IRS change, air fees.

Article Excerpt
The one-two punch from Hurricane Katrina and consequent fuel cost surges in the past two weeks spurred the federal government to revise reimbursable mileage guidelines for U.S.-based corporations and hotel analysts to forecast stifled domestic demand growth. Meanwhile, heightened costs further infected the already-ailing airline industry.

Amid high post-Katrina gas prices, the Internal Revenue Service last week implemented a rare midyear adjustment to its allowable vehicle reimbursement rate for the remainder of 2005 to 48.5 cents per mile--the largest single increase ever, at 8 cents over the initial 2005 rate. Meanwhile, British Airways, Lufthansa, Virgin Atlantic Airways and others this month announced increases to their passenger fuel surcharges, owing to debilitating jet fuel costs in the wake of Katrina.

Although IRS typically adjusts its annual mileage rate in the fall for the following year, the government agency is breaking precedent not only with the midyear adjustment but also by waiting to determine the 2006 rate.

"With many predicting a decline in gas prices over coming months, we will hold off on setting the 2006 rate until closer...

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