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Dec 07

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2013-80 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Sep 05

Tax collectors throughout history haven’t been as popular as athletes or entertainers–or even garbage collectors. But even against the decidedly lukewarm standard applied to most tax collectors, the IRS isn’t looking too good. It isn’t on most people’s favorites, and these days is at a low ebb.

 

The targeting scandal is three months old and is still going strong. Smack in the middle of it is Lois Lerner, famously invoking the Fifth Amendment. Then there were all the expense issues, the pricey conferences and the team building.

 

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One report said some IRS Brass Spent $100K Each On Travel. And who can forget the kitschy Star Trek, Gilligan’s Island and line dancing videos. Then there were the abused credit cards. Who wouldn’t like a charge card with bills direct to Uncle Sam? And this-  Audit Finds $119 of Unused Nerf Footballs in IRS Cabinet.

A watchdog report found little oversight. Another report from the Treasury Inspector General for Tax Administration said 30% of IRS Seizures of don’t comply with the law. In short, this isn’t your parents’ IRS.

 

Sure, the President now has a so-called turnaround expert in line to run the , er IRS. But you have to wonder, what’s the behemoth agency’s turning radius?  In the meantime, Congress–or at least Congressional Republicans–are sharpening up their axes to do a little IRS Profiling of their own.

 

If you aren’t too happy with the IRS right now, you’re not alone. House Republicans aren’t either, so passed an Internal Revenue Code-sized passel of bills by voice vote before their August recess. If nothing else, you have to love the names:

 

STOP IRS Act, H.R.2565. Actually, this bill has an alternate handle too, the Stop Targeting Our Politics Act. If passed, this law that would expand the existing grounds for firing an IRS employee. New firing offenses would include performing, delaying, or failing to perform (or threatening) any official action–including an audit–for purposes of personal gain or for a political purpose.

 

The Stop Playing on Citizen’s Cash Act, H.R.2769. This proposed law would impose a moratorium on any IRS conference until the Treasury Inspector General for Tax Administration submits a report to Congress certifying that IRS has implemented all the recommendations set out in its report covering the now notoriously expensive 2010 IRS conference . See “Review of the August 2010 Small Business/Self-Employed Division’s Conference in Anaheim, California.”

 

Government Spending Accountability Act of 2013, H.R.313. This proposed law would limit any government agency from spending more than $500,000 to support a single conference.

 

Government Customer Service Improvement Act of 2013, H.R.1660. You have to love this name. This bill would require the Director of the Office of Management and Budget (OMB) to develop government-wide standards for customer service delivery.

 

The Taxpayer Bill of Rights Act of 2013, H.R.2768. This bill would amend the tax code to say the duty of the IRS Commissioner is to ensure that IRS employees are familiar with and act in compliance with certain taxpayer rights.

 

Will all these bills actually pass and be signed into law by President Obama? Unlikely. Will any of them pass and be signed by the President? Maybe, but even that is far from clear. Stay tuned.

 

Thanks Forbes

 

Aug 12

Many employers outsource their payroll and related tax duties to third-party payers such as payroll service providers and reporting agents. Reputable third-party payers can help employers streamline their business operations by collecting and timely depositing payroll taxes on the employer’s behalf and filing required payroll tax returns with state and federal authorities.
Though most of these businesses provide very good service, there are, unfortunately, some who do not have their clients’ best interests at heart. Over the past few months, a number of these individuals and companies around the country have been prosecuted for stealing funds intended for the payment of payroll taxes. Examples of these successful prosecutions can be found on IRS.gov.
Like employers who handle their own payroll duties, employers who outsource this function are still legally responsible for any and all payroll taxes due. This includes any federal income taxes withheld as well as both the employer and employee’s share of social security and Medicare taxes. This is true even if the employer forwards tax amounts to a PSP or RA to make the required deposits or payments. For an overview of how the duties and obligations of agents, reporting agents and payroll service providers differ from one another, see the Third Party Arrangement Chart on IRS.gov.
Here are some steps employers can take to protect themselves from unscrupulous third-party payers.

 

  • Enroll in the Electronic Federal Tax Payment System  and make sure the PSP or RA uses EFTPS to make tax deposits. Available free from the Treasury Department, EFTPS gives employers safe and easy online access to their payment history when deposits are made under their Employer Identification Number, enabling them to monitor whether their third-party payer is properly carrying out their tax deposit responsibilities. It also gives them the option of making any missed deposits themselves, as well as paying other individual and business taxes electronically, either online or by phone. To enroll or for more information, call toll-free 800-555-4477or visit www.eftps.gov.
  • Refrain from substituting the third-party’s address for the employer’s address. Though employers are allowed to and have the option of making or agreeing to such a change, the IRS recommends that employer’s continue to use their own address as the address on record with the tax agency. Doing so ensures that the employer will continue to receive bills, notices and other account-related correspondence from the IRS. It also gives employers a way to monitor the third-party payer and easily spot any improper diversion of funds.
  • Contact the IRS about any bills or notices and do so as soon as possible. This is especially important if it involves a payment that the employer believes was made or should have been made by a third-party payer. Call the number on the bill, write to the IRS office that sent the bill, contact the IRS business tax hotline at 800-829-4933 or visit a local IRS office. See Receiving a Bill from the IRS on IRS.gov for more information.
  • For employers who choose to use a reporting agent, be aware of the special rules that apply to RAs. Among other things, reporting agents are generally required to use EFTPS and file payroll tax returns electronically. They are also required to provide employers with a written statement detailing the employer’s responsibilities including a reminder that the employer, not the reporting agent, is still legally required to timely file returns and pay any tax due. This statement must be provided upon entering into a contract with the employer and at least quarterly after that. See Reporting Agents File on IRS.gov for more information.
  • Become familiar with the tax due dates that apply to employers, and use the Small Business Tax Calendar to keep track of these key dates.

Give us a call we can answer your questions and we also have a payroll service specifically designed for the small business.

May 13

May 12 from Reuters -

When U.S. tax agents started singling out non-profit groups for extra scrutiny in 2010, they looked at first only for key words such as ‘Tea Party,’ but later they focused on criticisms by groups of “how the country is being run,” according to investigative findings reviewed by Reuters on Sunday.

Over two years, IRS field office agents repeatedly changed their criteria while sifting through thousands of applications from groups seeking tax-exempt status to select ones for possible closer examination, the findings showed.

At one point, the agents chose to screen applications from groups focused on making “America a better place to live.”

Exactly who at the IRS made the decisions to start applying extra scrutiny was not clear from the findings, which were contained in portions of an investigative report from the Treasury Inspector General for Tax Administration (TIGTA).

Expected to be made public this week, the report was obtained in part by Reuters over the weekend as a full-blown scandal involving the IRS scrutiny widened, embarrassing the agency and distracting the Obama administration.

In one part of the report, TIGTA officials observed that the application screening effort showed “confusion about how to process the applications, delays in the processing of the applications, and a lack of management oversight and guidance.”

After brewing for months, the IRS effort exploded into wider view on Friday when Lois Lerner, director of exempt organizations for the IRS, apologized for what she called the “inappropriate” targeting of conservative groups for closer scrutiny, something the agency had long denied.

At a legal conference in Washington, while taking questions from the audience, Lerner said the agency was sorry.

She said the screening practice was confined to an IRS office in Cincinnati; that it was “absolutely not” influenced by the Obama administration; and that none of the targeted groups was denied tax-free status.

It is clear from the TIGTA findings that Lerner was informed in June 2011 that the extra scrutiny was occurring. Key words in the names of groups – including ‘Tea Party,’ “Patriot’ and ’9/12′ – were being used to choose applications, TIGTA found.

“Issues” criteria were also used, TIGTA found. Scrutiny was being given to references to “Government spending, Government debt, or taxes; Education of the public via advocacy/lobbying to ‘make America a better place to live;’ and Statements in the case file (that) criticize how the country is being run.”

Under these early criteria, more than 100 tax-exempt applications had been identified, according to TIGTA.

Briefed on the practice, Lerner ordered changes.

CONSTANTLY SHIFTING CRITERIA

By July 2011, the IRS was no longer targeting just groups with certain key words in their names. Rather, the screening criteria had changed to “organizations involved with political, lobbying, or advocacy.”

But then it changed again in January 2012 to cover “political action type organizations involved in limiting/expanding government, educating on the constitution and bill of rights, social economic reform/movement,” according to the findings contained in a Treasury Department watchdog report.

In March 2012, after Tea Party groups complained about delays in processing of their applications, then-IRS Commissioner Doug Shulman was called to testify by a congressional committee. He denied that the IRS was targeting tax-exempt groups based on their politics.

The IRS said on Saturday that senior IRS executives were not aware of the screening process. The documents reviewed by Reuters do not show that Shulman had any role.

In May 2012, the criteria for scrutiny were revised again to cover a variety of tax-exempt groups “with indicators of significant amounts of political campaign intervention (raising questions as to exempt purpose and/or excess private benefit),” according to a TIGTA timeline included in the findings.

THOUSANDS OF APPLICATIONS

Each year the IRS reviews as many as 60,000 applications from groups ranging from charities to labor unions that want to be classified as tax-exempt. “Social welfare” groups dedicated to the general good can be tax-exempt under tax law 501(c)4.

These groups do not have to disclose the identities of their donors and they can spend money on advertising for general issues, but they may not endorse specific candidates or parties.

The U.S. Supreme Court’s January 2010 “Citizens United” ruling unleashed a torrent of new political spending and 501(c)4 groups became a popular conduit for some of it, on both ends of the political spectrum, but especially for conservatives.

The number of applications sent to the IRS by groups seeking 501(c)4 status rose to 3,400 in 2012 from 1,500 in 2010. As money poured into 501(c)4 groups, campaign finance activists began to raise questions and demanded a crackdown by the IRS.

 

Feb 07

Everyone’s check is smaller!

The rate of workers’ payroll taxes, which fund Social Security, has been 4.2% for the past two years. As of Jan. 1, it’s back to 6.2%, on the first $113,700 in wages.

The tax break was always meant to be temporary.

Workers earning the national average salary of $41,000 will receive $32 less on every biweekly paycheck. The higher the salary (up to $113,700), the bigger the bite, but business owners say their lower wage employees will feel it most.