IRS Increases 2007 Standard Mileage Rates for
Business, Moving, and Medical Purposes
The IRS issued the 2007 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning January 1, 2007, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
- 48.5 cents per mile for business miles driven
- 20 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service to a charitable organization
The new rate for business miles compares to a rate of 44.5 cents per mile for 2006. The new rate for medical and moving purposes compares to 18 cents in 2006. The primary reasons for the higher rates were higher prices for vehicles and fuel during the year ending in October. The mileage rate for charitable miles is set by statute.
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 after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire, or for more than four vehicles used simultaneously.
'Telephone Excise Tax Refund
Due to several recent federal court decisions, as of August 1, 2006 the IRS has stopped collection the federal excise tax on long distance telephone service. What Ė you didnít know that the feds got a piece of the action each time you made a long distant call?
There will be a one time refund payment available on your 2006 federal tax return for the excise taxes paid for long distance services on landlines, cell phones and voice over internet protocol. The details are:
- Available for federal long distance excise taxes only.
- For amounts billed after February 28th, 2003 and before August 31, 2006.
- Individuals, businesses, and nonprofits are eligible for this refund.
- Individuals can use the actual amount billed or a standard refund amount.
Standard Refund Amounts
|4 or More
I would suggest that you check you telephone bill for the last three years Ė itís more than you would think.
What To Look To From The IRS In The Near Future.
The following has been compiled from several sources.
The IRS has been making major changes in enforcement over the past several years. Last year the IRS had 1.2 Million individual audits (thatís 1,200,000) almost twice the number that were done just three years ago. The bulk of these audits were for "high income taxpayers". By the way "high income taxpayers" seems to be those individuals that earn more than $100,000 a year. In todayís world thatís a lot of people. The trend towards more audits will continue.
Aggressiveness Can Be Costly
In the past the IRS would, at times, agree to settle for less than the actual amount that they had computed was owed when it came to aggressive tax reporting. Not Any More. The IRS has indicated that they will no longer settle questions of aggressive tax reporting for less than a dollar for dollar rate. If you have items in your return that fall into this category I highly recommend that you to have extensive discussions with your tax professional. The potential cost not only in the amount of tax due but the penalties and interest could be significant.
Third Party Verification
Your going to love this Ė Remember these are numbers people - The IRS has determined that apparently only about 1% of W2 wage earners fail to report all of their income, however, business owners on the other hand show a 50% rate of noncompliance. They feel that third party compliance would be the key.
Things that they are looking at - Requiring the Credit Card companies to report the gross receipts received by a client to the IRS. It gets better. How about having the banks report the total deposits into your business account. It has been pointed out that when the IRS introduced the requirement for Social Security Numbers for all dependents over 5,000,000 dependents just up and disappeared. In their eyes verification works.
Why the Push
Last year what they refer to as the tax gap, (the difference between the amount of taxes owed and the amount actually collected) was greater than the entire fiscal budget deficit. If every body paid their taxes Ė NO DEFICIT
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