A blog focused on providing informative tax and personal finance information.

Doug Schulman opens the aperture wide on the future of the tax system.

IRS commissioner Doug Schulman’s annual speech at the National Press Club a week ago was substantively bolder than last year’s somewhat defensive plea on behalf of the IRS’s commitment to service as opposed to mere enforcement. This time around, he proposed no less than to, in his words, “open the aperture wide” and offer a view of our quickly evolving tax system that “takes us to its very horizon”.

The commissioner was quick to point out that he did not intend to peddle in the kind of science fiction that would befit a Worlds of Tomorrow anthology but instead to present a vision of the future grounded in the recent developments in tax processing that modern technology has made possible. It was an engaging performance, bolstered by a challenging proposal that, we suspect, will not escape controversy.

The goal of the IRS in Schulman’s take is to move beyond what he calls the “looking back” business model which, according to the commissioner, has governed the agency’s operations since its creation during the Civil War, above all when it deals with matters of tax compliance. (more…)

This just in: the IRS wants taxpayers to help them decide which tax preparers… they can decide to work with. At first, it seems like a pretty redundant exercise: the IRS is asking taxpayers and other interest groups to decide what criteria they’d like someone to satisfy before that person can prepare their taxes. People already do this — by paying someone to prepare their taxes.

So what is the IRS trying to add here? (more…)

Contrary to recent rumors, the IRS isn’t trying to tax employee mobile phones as a benefit. Instead, they’re getting rid of the existing tax — which nobody had bothered to pay.
(more…)

As of June 23rd, 2008, the IRS has increased the optional standard mileage reimbursement rate by 8 cents which is in effect for the last 6 months of tax year 2008 (July 1—December 31). For any business miles driven from January 1st through June 30th, the rate stands as 50.5 cents per mile, 19 cents per mile driven for medical or moving purposes and 14 cents per mile driven in service of charitable organizations. The new rate applies to qualifying expenses that have incurred on or after July 1st. As of July 1, 2008, through Dec. 31, 2008 the rate is now increased to 58.5 cents a mile. Therefore, it is important that the qualifying miles incurred between January 1, 2008 and June 30, 2008 are recorded separately from the miles accrued on and after July 1. When filing at RapidTax.com, we’ll automatically apply the appropriate calculation on your business miles.

“Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile.”

- IRS Commissioner Doug Shulman.

Generally, the IRS adjusts the standard mileage rates annually based on a yearly study of the fixed and deductible costs of operating an automobile for business, charitable, medical or moving purposes; however, due to the increase on gas prices, the rate has been updated to accommodate the rising cost. Since this increase also applies to medical and moving miles, they have also been changed from 19 cents per mile to 27 cents per mile.

The IRS has already acknowledged the recent drop in gas prices towards the end of 2008. In result, the optional standard mileage rate for 2009 has decreased to 55 cents per mile, a slight adjustment from the 58.5 cents per mile mentioned above. Miles for medical or moving purposes will be calculated at a new rate of 24 cents per mile and 14 cents per mile for service of charitable organizations. These new rates will not effect the upcoming tax year, but rather your 2009 taxes to be completed in 2010.

For more information, refer to IRS Announcement 2008-63.