MW Attorneys brings taxpayers the latest and most important tax news coming from the IRS. Stay up to date with all our IRS related posts.

IRS Optional Standard Mileage Rate Increased to 55.5 Cents

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The IRS optional standard mileage rate is being increased from 51 cents per mile to 55.5 cents per mile starting July 1, 2011.  The IRS normally adjusts the mileage rate each fall for the following calendar year.  However, this year, due to high fuel prices, the IRS is making an additional adjustment to the rate halfway through the year.  The 55.5 cents per mile rate will be effective until December 31, 2011.

Looking back, the IRS adjusted the rate part-way through the year in 2005 and in 2008 as well.  It peaked at 58.5 cents per mile back in the second half of 2008.

The standard mileage rate is used to compute the deductible costs of operating an automobile for business use.  It is ”optional” because taxpayers may choose to track their actual vehicle operating costs instead.  This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.  California employers are not required to use the IRS standard rate, but it is presumed to be reasonable.  If your employer reimburses you for mileage and is paying you less than 55.5 cents per mile after July 1st, you may want to point out the standard rate increase.

IRS-impersonation Scam Emails

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The IRS has emphatically stated that they do not send out unsolicited emails. So, if you receive an email that appears to be from the IRS, but requests personal / financial information, then chances are it is a scam. People who fall prey to these emails may become victims of identity theft if they give up the requested information to the scammer or if they unknowingly open up their computers to malicious software.

If you receive an email requesting personal information that appears to be from the IRS, do not open it and do not click on any links. You should immediately forward the email to phishing@irs.gov, then delete the email. If you believe you have become a victim of identity theft, contact our tax relief firm and we may be able to help you.

IRS “Fresh Start” Program

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On February 24, 2011, the IRS announced they would be rolling out a series of changes to current collection procedures that would prove to the world that they are just a bunch of softies.  Ok, they didn’t go that far.  But they did say that they would be filing fewer liens, simplifying the procedure for removal of a lien, and streamlining the Offer in Compromise program for certain taxpayers.

Here we are in June and there are still more questions than answers.  For example, the IRS claims that the new dollar threshold for filing a federal tax lien is now $10,000 instead of $5,000, but liens may be filed on balances less than $10,000 when circumstances warrant.  What circumstances might warrant a deviation from this new rule?  We don’t know.  The IRS also claims that they will be expanding the Streamlined Offer in Compromise process.  What are the details of this procedure?  And does it really benefit the taxpayer?  From what I have seen, “streamlining” a procedure can be a double-edged sword.  On one hand, the process is shortened so the taxpayer finds tax relief sooner if the offer is accepted.  On the other hand, if streamlining skips important steps or moves the process along so quickly that it prejudices the taxpayer, then only the government benefits.

IRS Employees in Need of IRS Tax Relief

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IRS Employees in Need of IRS Tax Relief ?

According to the Treasury Inspector General for Tax Administration (TIGTA), for years 2004 to 2008, the Internal Revenue Service (IRS) identified that it had an average of 8,788 employees per year who were not complying with U.S. tax laws. Of the 43,941 IRS employees not in compliance with U.S. tax laws over the five-year period, 34,095 of them failed to pay taxes owed, failed to pay on-time, or failed to timely file their tax return. In a report released by the TIGTA issued May 5, 2011, and released on June 21, 2011, an additional 133 IRS employees previously undiscovered by the IRS were not in compliance with tax laws. The TIGTA findings were made during an audit of the Employee Tax Compliance Program that is supposedly designed to ensure that IRS employees are held to a high standard of compliance with the tax laws. The bottom line is that the unforgiving Revenue Officer knocking on your door may be issuing along with that  bank levy or wage garnishment, a dose of “do as I say, not as I do.”

ETAAC Pushing IRS to Increase E-filing Numbers

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Yesterday the Electronic Tax Administration Advisory Committee (ETACC) released its yearly report to Congress.  This 14-member committee was created in 1998 and submits annual progress reports to Congress each June.  The ETACC report is always near the top of my summer reading list.  But I have been known start at the bottom of my list and work my way up.

One of the key topics that this committee reports on is the IRS’ 80% electronic filing goal.  ETAAC believes there are four main areas that the IRS needs to focus on in order to achieve this goal.

  1. Continue to encourage/require tax preparers to file electronically. In the 2012 tax season, tax preparers who file 11 or more returns will be required to e-file.
  2. Reduce the number of e-file rejects (current rejection rate is 15-20%).
  3. Increase the number of e-filed returns prepared at home (i.e., some people use filing software, but then print and mail the return).
  4. Continue to encourage those who prepare their returns manually to step over into the information age.  One way the IRS is doing this is by ceasing the practice of automatically sending paper forms to taxpayers.

 

The IRS Makes McDonald's-Like Claim

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The June 9th IRS headline read “One Billion Served: IRS E-File Passes Major Milestone” (see news release IR-2011-64).  The IRS has tallied the number of tax returns filed electronically since the e-file program began back in 1986, and the number has recently crept above one billion, including a whopping 100 million during the 2011 filing season.  These days nearly 80% of all taxpayers file their returns electronically.  If you employ a tax preparer to file your taxes, your tax preparer may be required to e-file, depending on the number of returns he/she files.  This has definitely contributed to the success of the program.

According to the IRS, e-filing benefits both the taxpayers and the government.  Taxpayers get faster refunds and more accurate returns, and the government spends less money processing them; according to the IRS, up to 20 times less.  Cheaper and quicker – maybe the IRS is following in the footsteps of McDonald’s.  Now if they could only process a return in the amount of time it takes to build a Big Mac.  Then they they’d really have something.