By James W. Rahmlow
The Daily Record Newswire
The IRS recently issued its standard vehicle mileage rates for 2011. Possibly attempting to acknowledge higher fuel prices, the standard rate for business miles increased to 51 cents/mile from the 2010 rate of 50 cents/mile. For medical and moving expenses, the 2011 rate will increase by 2.5 cents to 19 cents/mile. The higher fuel prices apparently have not impacted charitable miles as the rate remained at 14 cent/mile.
Final regulations issued for mandatory electronic filing of federal tax deposits
Ignoring the many objections voiced by taxpayers, the IRS has issued final regulations requiring all federal tax deposits to be made by electronic funds transfer. While still retaining the existing de minimis deposit rules, paper coupon deposits (Form 8109) have essentially been eliminated. In order to gear up for the inevitable questions and concerns by taxpayers, the IRS also announced that it is increasing its customer support for the mandatory electronic payment system to 24 hours a day, 7 days a week.
It should be noted that the IRS will allow small businesses lacking Internet access the option of scheduling an Electronic Federal Tax Payment System payment by telephone. The new system is effective on Jan. 1, 2011. No paper coupon deposits will be allowed after Dec. 31.
Capitalization versus repair of expenditures
While conceptual in nature, the IRS has released an Audit Techniques Guide, which addresses the issue of whether expenditures are currently deductible as a repair or must be capitalized. The ATG provides insight into the issues that an IRS examiner will consider when reviewing a taxpayer’s treatment of an item as to capitalization/repair. The issuance of the ATG is particularly timely since the IRS has recently designated portions of the capitalization/ repair issue as a Tier 1 issue, which emphasizes its high strategic importance to the IRS.
While sometimes lacking in hard and fast answers, the ATG does introduce an important issue, which is the unit of property. The UOP can be used as a benchmark in the capitalization versus repair decision.
No change yet … in the new 1099 rules
While two pieces of legislation were introduced to modify the new 1099 reporting requirements that were mandated in the Patient Protection and Affordable Care Act, there has been no change in the requirement that businesses must file a 1099 return for payments to vendors in excess of $600 starting after Dec., 31, 2011. If fact, both pieces of legislation were rejected in November 2010. Don’t expect the uproar to subside, either in remaining 2010 or in 2011, but for right now, businesses should proceed with the expectation that the new mandate will stay in place.
Taxpayer records can be submitted in electronic format
Acknowledging the need to utilize the data at hand in a format that is acceptable to both parties, the IRS has announced on its website (www.irs.gov) that it is now accepting taxpayer records in electronic format using certain accounting software programs to enhance the examination process. Electronic data provides more flexibility than paper records and can accelerate the audit process. To make sure that the electronic records are positively received, the IRS has completed training for approximately 1,000 revenue agents using selected accounting software.
To be utilized, the IRS has indicated that the electronic tax records must be provided on a flash/jump drive, in CD or in DVD format to ensure security.
AFR rates for December 2010
In a recent revenue ruling, the IRS issued its short-term, mid-term and long term applicable interest rates for December, 2010. Below is a summary of those rates:
Applicable Federal Rates (AFR)
Short-term 0.32 percent
Mid-term 1.52 percent
Long-term 3.47 percent
Adjusted AFRs
Short-term 0.49 percent
Mid-term 1.61 percent
Long-term 3.61 percent
Undelivered refund checks exceed $160 million
With the 2009 tax filing season completed, the IRS has reported that over 110,000 taxpayers are owed refunds of over $160 million that were not able to be delivered to taxpayers due to problems with the mailing address used for the refund check.
Online tools exist at “Where’s My Refund?” on www.irs.gov to assist taxpayers in obtaining their refunds. Identification is required on the website in the form of Social Security Number, 2009 refund amount and 2009 filing status. Taxpayers can generally update their address on the website. Alternatively, refunds can be checked over the phone by calling 800-829-1954.
James W. Rahmlow, CPA, is a partner with Mengel, Metzger, Barr & Co. He can be contacted at jrahmlow@mmb-co.com.
