Business Mileage: Beware of IRS Assertions of Metropolitan Area

The IRS has ruled that you “may deduct daily transportation expenses incurred in going between your residence and a temporary work location outside the metropolitan area where you live and normally work.”

In this favorable ruling, you find two possible impediments:

  1. Temporary work location
  2. Metropolitan area

You learned last month in Don’t Let IRS Mileage Rules Destroy Your Vehicle Deductions that the “temporary work location” is a location where you realistically expect that the work at this location will, and does in fact, last for one year or less. You also learned that the temporary work location rule applies both inside and outside your metropolitan area.
In this article, which is Part 2 in a series of articles on how to create and protect your business miles, you will learn

  • why you need to define your metropolitan area,
  • how to define your metropolitan area, and
  • how to totally eliminate the metropolitan area problem.

Why You Need to Define Your Area

Let’s start with how the IRS has defined the metropolitan area.
In an audit of Edward Harris, a surveyor, the IRS disallowed 23,000 business miles because Harris was inside his metropolitan area when he drove from his home to work locations that required round trips of 100 to 162 miles. In this audit, the IRS considered the Los Angeles Metropolitan Area as Harris’s metropolitan area.
Harris took the IRS to court, where he lost.1 But Harris thought the court decision unfair; he appealed it, and the Ninth Circuit in an unpublished opinion overruled the lower court on the metropolitan area definition and remanded the case back to the tax court.2

Result. Harris kept the 23,000 deductible business miles for his trips from his home that were outside his metropolitan area.
In Wheir,3 Corey Wheir asserted at trial a 35-mile radius as his metropolitan area. The IRS did not use the metropolitan area but instead asserted two alternatives to the metropolitan area test:

  • First, that Wheir commuted when he drove within 80 miles of his home in Wisconsin Rapids, Wisc. The IRS called this Wheir’s “normal work area.”
  • Second, that Wheir commuted whenever he drove anywhere in the state of Wisconsin.

The court ruled for Wheir because he set forth a 35-mile radius from Wisconsin Rapids as his metropolitan area. The IRS failed because it did not use a metropolitan area test and it did not convince the court that its alternative tests were of value.
In Marple,4 the court accepted Daniel Marple’s 45-to-50-mile radius from his home as his metropolitan area.
As you can see, the concept of metropolitan area can do great damage to your mileage deductions. This means you need to either establish the boundaries of your metropolitan area or set yourself up so that the metropolitan area does not apply to you (as we discuss later).

How to Define Your Metropolitan Area

Remember, according to IRS regulations, the cost of commuting from home to work is a nondeductible expense.5 In Don’t Let IRS Mileage Rules Destroy Your Vehicle Deductions, you learned how to overcome the commuting rule with an office in the home.

If you don’t have a principal office in your home and don’t have a regular office outside your home, your trips from home to business locations are personal. But trips from your home to temporary work locations outside the metropolitan area where you live and normally work create business miles.6

Example. Ted works from home but does not claim a home-office deduction and doesn’t have an office outside the home. At the end of the year, Ted has 11,000 personal miles for trips inside his metropolitan area and 13,000 business miles for trips outside his metropolitan area.

What is Ted’s metropolitan area? You saw earlier how the lack of a clear definition of “metropolitan area” can create trouble. First, metropolitan area is not the metropolitan statistical area or any other defined area. In the IRS ruling, your metropolitan area is where you live and normally work.

From what we see, your metropolitan area is based on your facts and circumstances, and there’s no one clear answer. The IRS states: “Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area.” This could be of help, depending on your facts and circumstances.

Fifty miles from your home may be a good rule of thumb because:

IRC Section 162(h) defines 50 miles as the local area for state legislators.7
Reg. Section 5e.274-8(a) defines 50 miles as the local area for a member of Congress.8
The federal government defines “metropolitan area” for IRS personnel and other federal employees as a mileage radius of not greater than 50 miles within or outside the limits of the physical location of an IRS office. This is consistent with the regulations in 5 CFR 550.112(j) and 5 CFR 551.422(d), and it’s found in the Internal Revenue Manual Section 6.550.1.1.7—Time Spent Traveling (last revised: 12-10-2009).9

How to Totally Eliminate the Metropolitan Area Problem

If you have an office in your home that qualifies as a principal place of business within the meaning of section 280A(c)(1)(A), you may deduct daily transportation expenses incurred in going between your home and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance.10

The principal office in the home creates:

  • Business miles for trips from your home to your regular office
  • Business trips to all temporary stops, whether inside or outside your metropolitan area—regardless of the distance

Note that with a principal office in your home, you eliminate (a) your commuting to your regular office outside the home, (b) metropolitan area issues, and (c) the temporary stop issues.


When you use your vehicle for business, you face

  • Commuting rules
  • Temporary stop rules
  • Metropolitan area rules

The rules prove difficult in many ways, but if you can claim a home-office deduction that qualifies your office as a principal office, you automatically overcome all the difficulties imposed by the rules above.
With the home office, you don’t have to worry about defining your metropolitan area.
With the home office, you don’t have to worry about the one-year or more temporary stop rules.
It’s pretty straightforward. With the home office as a qualifying principal office, most of your mileage is going to be worry-free business mileage.

1 Edward Harris, TC Memo 1980-56.
2 Harris v Commissioner, T.C. Memo 1980-56, aff’d in part and rev’d in part, 679 F.2d 898 (9th Cir. 1982).
3 Corey L. Wheir v Commr., TC Summary Opinion 2004-117.
4 Daniel P. Marple v Commr., TC Summary Opinion 2007-76.
5 Reg. Sec. 1.262-1(b)(5).
6 Rev. Rul. 99-7.
7 IRC Section 162(h).
Business Mileage: Beware of IRS Assertions of Metropolitan Area…
4 of 5 12/19/17, 9:54 PM
8 Reg. Section 5e.274-8(a).
9 Internal Revenue Manual 6.550.1.1.7—Time Spent Traveling (last revised: 12-10-2009).
10 Rev. Rul. 99-7; IRC Section 280A(c)(1)(A).

Scroll to Top