Tax Update Blog

Tax News & Views Mileage Boost a Go-Go Roundup

June 10, 2022 | Blog
By Jay Heflin

IRS Boosts Drivers’ Mileage Deduction Amid Gas Price Spike - Richard Tzul, Bloomberg ($). “The IRS on Thursday announced a mid-cycle increase to the mileage deduction rate for vehicles used for business purposes. The increase to 62.5 cents per mile, up from the current rate of 58.5 cents per mile, will take effect July 1 and remain for the rest of 2022. The IRS also announced a 4-cent-per-mile increase for vehicles used for medical or moving purposes, which will rise to 22 cents per mile.”

‘The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,’ IRS Commissioner Chuck Rettig said in a statement. ‘We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.’

IRS Announces Increase to Standard Mileage Rates for Remainder of 2022 – Bailey Finney, Eide Bailly. “The IRS has released (Announcement 2022-13) revisions to the 2022 standard mileage rates. The rates are used to determine the deductible costs of using a vehicle for business, charitable, medical, or moving purposes. The new rates are effective July 1, 2022. The increased rates are a revision to Notice 2022-03, which is still effective for travel from January 1st through June 30th. The mid-year special adjustment is in recognition of gasoline price increases.”

Straight from the horse's mouth:

IRS increases mileage rate for remainder of 2022 – IRS:

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. For travel from Jan. 1 through June 30, 2022, taxpayers should use the rates set forth in Notice 2022-03.

Notice 2022-03 for the first part of year is here.

Announcement for the second part of the year is here.

 

IRS’s New High-Income Examiners Off to Rocky Start, Tax Pros Say – Jonathan Curry, Tax Notes ($). “The IRS has deployed a new crop of tax examiners to review the tax returns of high-net-worth taxpayers, but tax advisers to those taxpayers aren’t impressed with what they’ve seen so far.”

‘We’re seeing a lot of new examiners on examinations,’ Spencer Paul of Deloitte Tax LLP said June 9. That’s led to a different dynamic on exams involving wealthy taxpayers because the new hires ‘don’t have experience with the dance between the representative and the IRS,’ he said at an American Institute of CPAs conference in Las Vegas.

 

IRS Open to Suggestions on ‘Friendly Doctor’ Structure Guidance – Erin Slowey, Bloomberg ($). “The IRS is still studying and seeking comments on beneficial ownership in ‘friendly doctor’ structures, according to an agency statement provided to Bloomberg Tax.”

 

Dirty Dozen: IRS, Security Summit reiterate recent warning to tax professionals and other businesses of dangerous spear phishing attacks – IRS. “The Internal Revenue Service today announced that spear phishing is the 8th item on the 2022 ‘Dirty Dozen’ scams warning list and a serious problem because it can be tailored to attack and steal the computer system credentials of any small business with a client data base, such as tax professionals' firms.”

‘Tax professionals generally relax a little after filing season and many take a well-deserved vacation but don't let your IT defenses down,’ said IRS Commissioner Chuck Rettig. ‘Spear phishing remains one of the biggest threats to the tax industry and other client-based enterprises.’

That’s a wrap: IRS released final scams list for the 2022 filing season. The release is here.

 

IRS: The ‘Wasting Asset’ Rule Will Remain in Some Form – Chandra Wallace, Tax Notes ($):

The coming regulation package under section 382 will address treatment of certain assets with built-in gains and losses at the time of an ownership change when calculating loss limitations, according to an IRS official.

The current rule under Notice 2003-65, 2003-2 C.B. 747, allows taxpayers to choose between two approaches to deal with built-in gains and losses in assets that have a limited life span and irreversibly decline in value over that time period — so-called wasting assets. Regulations proposed in 2019 would have eliminated that rule.

 

Yellen Says Crypto Is ‘Very Risky’ Option for Retirement Savers - Christopher Condon, Bloomberg ($). “US Treasury Secretary Janet Yellen said that crytocurrency assets are a ‘very risky’ choice to include in the retirement plans of average savers, and that it would be reasonable for Congress to address the danger.”

‘It’s not something that I would recommend to most people who are saving for their retirement,’ Yellen said Thursday in Washington at an event organized by the New York Times. ‘To me it’s very risky investment.’

 

Biden’s $52 Billion Chips Plan Stuck; Lawmakers Eye Election – Jenny Leonard and Daniel Flatley, Bloomberg ($). “Long-stalled legislation to boost US semiconductor manufacturing and strengthen competitiveness against China risks collapsing in Congress, with Republicans growing skeptical of the measure as midterm elections near and Democrats focusing instead on gun violence.”

This bill was originally expected to include tax provisions (possibly fixes for R&D, the interest deduction, and LIFO) and pass by July 4th. That plan seems to be on ice at the moment and the inclusion of tax provisions seems unlikely. 

 

Keeping NOL Safe Harbor Could Aid Troubled Startups – David van den Berg, Law360 Tax Authority ($). “Retention of a safe harbor marked for elimination by the IRS that allows some businesses expanded use of net operating losses could assist troubled startups working to develop innovative products, helping them turn around their businesses.”

 

Alternative Budget Plan - Patrick Ambrosio, Bloomberg ($). “The Republican Study Committee’s Budget and Spending Task Force on Thursday released its annual alternative budget proposal, which calls for the permanent extension of the 2017 tax law.”

The plan goes a step further than current law on the SALT deduction:

The RSC Budget fully repeals the state and local tax (SALT) deduction.

Important to note: This plan is totally useless in the current Congress because Republicans are not in control. If the GOP gains the majority in the future, this plan might become a legislative roadmap.

And if the GOP takes Congress, IRS hearings will be plentiful:

House Members Press IRS on Document Destruction – Fred Stokeld, Tax Notes ($). "Two House Republicans are demanding answers regarding the recent revelation that the IRS destroyed about 30 million unprocessed information returns in 2021. A May 4 Treasury Inspector General for Tax Administration audit indicated that the IRS destroyed the returns instead of digitizing them, Rep. James Comer, R-Ky., ranking member of the Committee on Oversight and Reform, and committee member Nancy Mace, R-S.C., noted in a June 8 letter to IRS Commissioner Charles Rettig.”

W-2, Forms 1099 and 1098 were a part of what has trashed, which means they will not be available for audits, etc.

‘Committee Republicans are concerned that the destruction of these documents might [slow] already inefficient processing procedures and hurt American taxpayers left unaware that the IRS destroyed documents already entrusted into its care,' Mace and Comer told Rettig. ‘Indeed, it appears that the IRS may now demand that taxpayers provide duplicate copies of information previously destroyed by the IRS.’

 

Rick Scott Revises Tax-Increase Proposal After Facing Criticism – Alex Leary and Richard Rubin, Wall Street Journal ($):

Florida Sen. Rick Scott is backing away from a proposal to require low-income Americans to pay at least some federal income tax, shifting his stance after facing criticism from fellow Republicans and handing an attack line to President Biden and Democrats.

This plan was never taken seriously by Senate Republican leaders because it proposed that everyone – old, young, everyone – pay income tax. Scott has narrowed that range.

From the new plan:

Able bodied Americans under 60, who do not have young children or incapacitated dependents, should work. We need them pulling the wagon and paying taxes, not sitting at home taking money from the government. 

Even with this change, the plan is not expected to be taken seriously. In fact, this plan was a head-scratcher from the get-go for people within his own party. 

 

House OKs Gun Safety Bill With Storage Tax Credit – Asha Glover, Law360 Tax Authority ($). “Businesses would be entitled to a tax credit equal to 10% of the cost of safe firearm storage devices sold under a bill passed by the U.S. House of Representatives that aims to tighten gun restrictions.”

This bill is not expected to pass the Senate.

 

EV tax credits ‘on the table’ as Democrats try reviving parts of Build Back Better – Tobias Burns, The Hill. “Sen. Joe Manchin (D-W.Va.) recently threw another wrench into the Biden administration’s economic agenda by saying it was 'ludicrous' to pursue tax credits for electric vehicles (EVs), which would make up half of all cars on the road by 2030 if White House economic planners get their way. But Democratic lawmakers looking to revive elements of President Biden’s Build Back Better plan say that EV tax credits are still under consideration as part of broader legislation to make the economy more environmentally friendly.”

‘There’s a lot of promise with EV tax credits, and I believe it’s still on the table,’ Rep. Haley Stevens (D-Mich.) said in an interview.

Two things:

#1. When a lawmakers states 'I believe' it usually means they don't know. 

#2. In this case, the lawmaker is probably right because everything is on the table. That's been the case since November of last year. 

 

Indiana Governor Calls Special Session to Refund Tax Surplus – Alex Ebert, Bloomberg ($):

This summer, Hoosier mailboxes may be lined with $350 tax refund checks secured in a special session that Indiana Gov. Eric Holcomb announced Thursday.

Holcomb (R) is calling the GOP-controlled state House and Senate back into session before the end of June to enact legislation expanding the state’s automatic taxpayer refund of $125 to as much as $350 for each eligible taxpayer.

 

April Gaming Revenue Rises 12.4%, With Sports Betting Up 75% - Angélica Serrano-Román, Bloomberg ($). “Revenue grew in April across all types of gaming—casino games, sports betting, and online wagering on events—to $4.99 billion, up 12.4% from 2021, according to an American Gaming Association report. It said 24 of 31 commercial gaming states that were operational a year ago posted revenue growth.”

 

Vacation Home Loses Michigan Man His Tax Break, Court Rules – Alex Ebert, Bloomberg ($). “A mistaken property tax exemption for an Arizona winter home cost a snowbird his principal residence exemption on his lakeside home in Michigan, a unanimous Michigan Supreme Court ruled Thursday. The Cheboygan, Mich. man never applied for a property tax exemption when he purchased his Arizona winter retreat in 2016—the state gave it to him by accident. But his intent didn’t matter, because Michigan law applies even when there’s 'an honest mistake,' Justice Elizabeth Welch said in her opinion.”

 

Additional Sales Tax on Car Lift Maker Upheld by N.Y. Tribunal – Perry Cooper, Bloomberg ($). “A company that installs car lifts in apartment buildings in New York failed to convince a state tax tribunal that its installations are tax-exempt as capital improvements.”

 

A SC businessman allegedly kept the tax on $3.7 million in sales. Now he faces charges – Lyn Riddle, The State:

A Hopkins businessman was arrested Wednesday and charged with not paying tax on $3.7 million in sales… He faces six counts of tax evasion, one for each year. The warrants say Intimate Elements had more than $44,000 in sales in 2016, growing to more than $1.5 million in 2021. If convicted, Dozier faces a maximum sentence of five years in prison and/or a fine of up to $10,000 per count.

 

Colo. Approves Ballot Question On Disclosing Tax Impacts – Sanjay Talwani, Law360 Tax Authority ($). “Colorado will ask voters to decide whether to require ballot measures that change individual income tax rates to show the average expected tax changes for filers in different income ranges.”

 

Navigating the New Foreign Tax Credit Regulations (Podcast) - Michael Rapoport, Bloomberg ($). “One of the hottest issues in the corporate-tax world right now is about when multinational companies can use the taxes they pay in foreign countries to defray their US tax bills.”

 

Basis Guidance Could Come Before PTEP Regs’ Release – Andrew Velarde, Tax Notes ($). “Before issuing regs on previously taxed earnings and profits (PTEP), the IRS is contemplating releasing guidance on basis adjustments related to timing mismatches between the global intangible low-taxed income provision and midyear distributions or sales."

Peter Blessing, IRS associate chief counsel (international), said the IRS had received an ‘incipient request for a ruling’ regarding the timing of basis adjustments under section 961(a) because of a GILTI or subpart F inclusion…

‘The question is just a mismatch in timing, and it's been there forever as an issue,’ Blessing said June 8 during a conference sponsored by the Texas Federal Tax Institute in San Antonio. ‘If it's not a big number, people get comfortable. If it's a big number, they've waited to the end of the year [to make the distribution]. We may end up giving some kind of guidance on that before the regs come out.’

 

The Scream and the Screeds: Munch Rants About Norwegian Tax – William Hoke, Tax Notes ($). “There’s a theory that artistic creativity is driven by angst. If that's true, perhaps the Norwegian Tax Administration inspired some of the masterpieces of Edvard Munch, the tortured genius who painted The Scream. Munch’s interactions with the tax agency often drove the artist to distraction, according to a recent article published by Oslo’s Munch Museum… The museum also holds many documents penned by Munch, including correspondence, diaries, notes, and poetry. One of the notebooks is over 300 pages and deals solely with Munch’s tax calculations, the museum said.”

‘It’s the many details and the fact that I have to . . . declare the accuracy of the calculation,’ he wrote in an undated note. ‘I spend a lot of time, [then learn] that I have calculated incorrectly. Then I must do it all over again.’

Speaking of screaming, awhile back I shared my troubles with calculating the AMT with the senior tax staffer on the House Ways and Means Committee. He nonchalantly informed me that computers were needed to calculate the AMT because humans can't do it alone. 

 

Washington D.C. insider stuff:

Brady Welcomes Kustoff to Ways & Means, Announces Schweikert as Republican Leader of Social Security Subcommittee - Ways and Means Republicans:

WASHINGTON, D.C. – Ways and Means Committee Republican Leader Rep. Kevin Brady (R-TX) today released the following statement as he announced updated subcommittee assignments for the 117th Congress, as well as a new member of the Committee:

'Members of Ways and Means, led by our Subcommittee Leaders, have kept up the fight against President Biden’s dangerous tax increases, are holding the IRS accountable, getting Americans back to work, promoting selling American goods overseas, making health care affordable, and saving Medicare and Social Security for seniors.

'Joined newly by Rep. Kustoff on the committee and Rep. Schweikert as the new Republican Leader for the Subcommittee on Social Security, each of our deeply talented and qualified Republican members are well-positioned to fight for greater opportunities for workers, families, and small business owners across the country.'

As you probably know, the House Ways and Means Committee is responsible for moving tax legislation, be them cuts or increases. Rep. Kustoff hails from Tennessee, which means people in his district now have a key person who can affect tax legislation. It's been a while since The Volunteer state has such representation. And yes, Washington insiders find this stuff fascinating. 

 

Happy National Ballpoint Pen Day! Before 1943 such devices did not exist, according to National Day Calendar. The horror!


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This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.