Saturday, June 21, 2008

WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENNIN’

* Paul Caron, the TAX PROF, reports that since the IRS announced the 2008 mileage rates on November 27, 2007, the price of a gallon of gasoline in the U.S. has risen 31.2%, from $3.079 to $4.039. I actually paid $4.00 per gallon ($3.999) in New Jersey, one of the less expensive gas states, on Father’s Day. No wonder the National Treasury Employees Union has called on the IRS to increase the 2008 optional Standard Mileage Rates, as Paul reports in “Group Calls on IRS to Increase Standard Mileage Rate in Light of Record Gas Prices”.

The Tax Foundation’s TAX POLICY BLOG also reports that “Sen. Coleman Seeks Increase in Mileage Reimbursement Rate”. The post states that Sen. Charles Schumer (D-NY) “has a bill pending (S. 3032) to temporarily standardize business, medical, and moving reimbursement rates at 70 cents per mile, with charitable reimbursement increased to 40 cents per mile”.

The IRS had increased the standard mileage allowances during the year in 2005. In that instance there was one rate for the first 8 months of the year and another for the last 4 months. I hope that when (and I do expect it to happen) the IRS, or Congress, raises the SMAs for 2008 they make it retroactive and effective for the entire year 2008. Anytime there are two separate rules for a deduction at various times of the year it is a true PITA for we tax preparers.

FYI, generally the SMA for business, medical and moving travel is set annually by the IRS, while the SMA for charitable driving is set by Congress. The current 14 cents per mile for charity has been around for quite a while now (there was a temporary increase for Katrina-related charitable driving).

* Glad to hear Joe Kristan and his associates at ROTH AND COMPANY survived the floods in Iowa. On June 16th he posted some tax advice and information for individuals who were affected by the floods – and for those who are victims of similar natural disasters in a covered disaster area at the firm’s TAX UPDATE BLOG.

* There has been a lot of buzz about Obama and McCain’s tax policies – and we haven’t even had the conventions yet! As one would expect, McCain has the better of the two, although his is certainly not perfect. Obama wants to further complicate the Tax Code with targeted tax breaks for the “less fortunate” (most of them already pay no taxes) and increased income and Social Security taxes on those he considers to be “wealthy”. An article on my Comcast.net homepage titled “McCain, Obama Offer Different Visions on Taxes” is just one of the online comparisons.

* An article in Thursday’s USA TODAY (“How Much Do You Make? It’d Be No Secret in Scandinavia”) reports that each year Sweden, Finland and Norway makes public every one of its citizen’s tax returns, so anyone can look up what his in-laws or neighbors make.

* An “As The Congress Turns” update - The CCH Tax Newsletter reported in
Ways and Means Approves AMT Patch with Revenue Offsets” that on June 18th.

According to the article the Alternative Minimum Tax Relief Act of 2008 (HR 6275) “will never reach a vote in the Senate because Republicans object to the revenue-raisers.” Republicans “predicted that history will repeat itself and that the Democratic-controlled Congress will eventually pass an AMT relief bill without revenue offsets, just as it did in 2007”.

Oi vey! It looks like it will be down to the wire again this year with regards to “extenders”. All this nonsense about “sunsetting” and “extenders” is relatively new in the tax world – unique to George W’s tenure. In the past when Congress passed a tax measure it was the permanent law until a future Congress changed or repealed it. Tax law never “expired”.

It is just one more example of how Congress is basically lazy and prefers to “react” with a quick fix rather than “respond” with thoughtful legislation to actually deal with the causes of a problem or issue.

* TAX GIRL Kelly Phillips Erb reports “JK Harris and Company, LLC, a national tax debt firm that promised to help folks settle tax debts, has agreed to change its advertising practice and pay millions of dollars in restitution under a settlement with attorneys general in 18 states.” in her post “Tax Debt Firm Settles With Attorneys General In Multiple States”.
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JK Harris is one of the companies that erroneously advertise they can settle your outstanding tax debts for “pennies on the dollar”. According to Kelly (emphasis is mine), “Among the allegations against JK Harris was that the company regularly advertised it could help people who owed taxes to the IRS by filing an Offer in Compromise while knowing that the taxpayers may not qualify. The company took money upfront for this service, it was alleged, and the money was not refunded.”
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As I continue to advise my readers – if you owe a ton to “Sam” and think you may qualify for relief via an Offer in Compromise do not contact any of the “pennies on the dollar” firms that advertise on television and elsewhere. Talk to your tax professional first, or to a reputable and competent tax professional like Kelly. You can find a tax pro in your area by going to
www.taxprofessionals.com .
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* Kay Bell reports in DON’T MESS WITH TAXES that “Congress Taking a Look at Rebate Process” in light of all the FUs that have surfaced lately regarding the “stimulus” payments. According to the posting (emphasis is mine) -

Oversight Subcommittee Chairman John Lewis (D-Georgia) and Social Security Subcommittee Chairman Michael R. McNulty (D-New York) noted that,To administer the rebate checks, the IRS and the Social Security Administration (SSA) received an additional appropriation of $50.7 million and $31 million, respectively, to ensure that the rebate checks are fully and properly paid.’”

$81.7 Million of the taxpayers’ money wasted to process this unnecessary election year scam! That means that the federal deficit is $81.7 Million more than it should be (and don’t forget to add the humongous amount of the actual rebates themselves)!

* Kay also discusses the new Heroes Earnings Assistance and Relief Tax (HEART) Act, which George W signed into law last week, in her post “HEART Act Now Official”.

TTFN

3 comments:

kevin said...

For any of your readers who want a simple way to track mileage expenses, you might want to check out http://paybackable.com - it automatically calculates mileage expenses using the current IRS rates. Just enter the date of travel, a brief description and the number of miles driven - Paybackable does the rest, even when rates change. There's a free plan for individuals and a 30-days free trial for companies with multiple users. It sure beats having to keep track of these rate changes:-)

Robert D Flach said...

Kevin-

This looks good. I will test it myself at the beginning of July and post a review.

TWTP

mileageblogger said...

There is an exciting new business tool provided by http://www.MileageLogger.com that will help you capture your business mileage automatically, no need for pen and paper. It's absolutely hands free and all your business mileage records are available online. I think is something that might help you get a bigger deduction since it will capture all your mileage for your business.