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“Taxing” is a word synonymous with “onerous” and “wearing.” Bond Beebe, Accountants & Advisors, have created a user friendly blog called “It’s Taxing” to inform and educate our clients and business associates on timely topics related to tax, estates, accounting and finance. We hope our blog answers your questions and alleviates the heavy burden and anxiety related to understanding complicated tax laws and related matters.
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
UPDATE: August 5, 2011: Congress passed and the President has signed legislation that reinstates the taxes, retroactive to July 23, 2011. Therefore, passengers who purchased tickets before July 23, 2011 and traveled between July 23, 2011 and August 5, 2011 are not entitled to a refund of the taxes. The IRS plans to provide relief regarding taxes not otherwise paid or collected because of the lapse.
At midnight on July 22nd, 2011, the legislation mandating some of the taxes that passengers pay when purchasing an airline ticket expired. Until Congress passes new legislation reauthorizing the taxes, airline tickets will not include these taxes. The taxes include a 7.5 percent tax on the base ticket price, $3.70 per person per segment for domestic flights (higher for international flights), and a 6.25 percent tax on the amount paid for transporting property by air.
If you purchased an airline ticket prior to July 23rd, 2011, for travel after July 22nd, 2011, you are eligible for a refund of those taxes that you paid. The taxes apply relative to the travel dates, not the ticket purchase dates. The IRS suggests, in a posting on its website, that you first attempt to get the refund from the airline. They have your travel dates and payment information and therefore can streamline the refund process. If you are unable to get a refund through the airline, the IRS will come out with guidance “at a later date” to allow taxpayers to claim a refund through the IRS.
It is unclear at this point what will happen to passengers who purchase their tickets after July 22nd, 2011 and pay no tax, yet travel after the tax is reinstated. Congress will have to address that scenario when they reauthorize the taxes.
In the meantime, check any tickets that you have purchased and request a refund from your airline. Good luck!
As sure as the sun will rise in the morning, a phishing scam alleging to be from the IRS will appear in your e-mail box. Since most everyone has some dealing with the IRS and filing taxes, You are a popular target for scammers who count on people to take the bait and click on the links. Fear of the IRS or an audit can make normally cautious people panic and click through the emails without fully considering the ramifications.
The IRS issues repeated warnings about these emails.
Due to increases in the price of fuel, the IRS announced today an increase in the optional standard mileage rates effective July 1,2011. The new standard mileage rates are 55.5 cents per mile for business use of an automobile and 23.5 cents per mile for medical or moving. The mileage rate for charitable miles is fixed by law and remains at 14 cents.
Here are four ways to make your required business travel a little less stressful:
Saturday night stay-overs: Your out-of-town business chores conclude on Friday and you would like to extend your business trip to take advantage of a low-priced fare requiring a Saturday night stay-over. The IRS says that if the savings in airfare are higher than the costs of the weekend meals and lodging, then you can deduct your Saturday meal and lodging expenses.
Do you have a personal disaster recovery plan? We like to think disasters can never happen here, but as we have seen by many recent tragedies across the globe, disaster can strike anywhere and when we least expect it.
The IRS recently released a very helpful and timely guide to safeguarding tax records in concurrence with the start of Hurricane Season on June 1st. Nonetheless, here are some additional steps recommended by the IRS for you to safely store your records prior to an emergency.
‘Recently being in the market to upgrade my car to a more fuel economic vehicle, I went to the neighborhood dealership. Financing the vehicle is probably the only way I could afford the purchase until I saw the terms of the loan, which were approximately $32,000 at almost 4.5% interest over the next five years. Perhaps the economy has not turned for me as quickly as it has for others, but I left the offer on the table and began to look at my options. Maybe I could ask my grandfather for the money and then I could pay him back the $32,000, which may work out well for me and my credit?’ –A FICTIONAL SCENARIO
Typically, we would see the grandfather agree to make the loan of $32,000 and tell his grandson he can pay him back when he can. There are no written terms, no stated interest rate and no real expectation to receive repayment in a timely fashion. After all this is a loan between family? This model can be defined as a demand loan and further categorized as a gift loan by the IRS standards outlined in §7872. The IRS defines multiple loan arrangements like this in §7872 including compensation related loans, corporate-shareholder loans, certain qualified care contracts and the aforementioned gift loans. Now de minimus exceptions may apply to these loans under $10,000, however, the IRS attempts to enforce guidelines on these types of loans which are generally offered at below market interest rates and/or ‘interest-free.’ (i.e. – loans to business partners, family members, etc.)