Below are the new rates effective January 1, 2012 as published in IRS Notice 2012-1:

For those that wish to read the entire IRS Notice 2012-1 notice and/or get further clarification, please click here 2012 Mileage Rates

Please note that for 2011, there were two reimbursement rates.  For information on January through June 2011 rates, please read the following article  IRS Releases 2011 Standard Mileage Rates .  For more information on July through December 2011 rates, please read IRS Increases Standard Mileage Rates.

If you are in need of further assistance or have questions concerning this notice, the use of the SMR rates or any related question, please contact us.  We will generally respond within 24 hours of receiving your request.

As the next few weeks develop, we will be bringing you updates on tax tips for both individuals/consumers and businesses.  Some of the tips you will see from us will be as follows:

• Tax bills that have passed in 2011 and how  they  impact  this year’s tax return.
• Tax preparer requirements to register  with the Internal Revenue Service and what that means to you.
• How to decide if you need a CPA/tax attorney/enrolled agent to prepare your tax return or simply a tax preparer.  We will specifically address the “registered tax return preparer” and how not to be fooled.
• Other topics of interest we think will be useful to you.

Please feel free to contact us directly or provide us with comments, thoughts, gripes & complaints in the comment section below.  While we may not be able to change things, it sometimes is helpful to at least tell the world of your frustration.

To find out more about the NCACPAs on-going effort to make everyone financially literate, visit their website www.ncacpa.org .  Additionally, please visit the American Institute of CPAs financial literacy website www.FeedThePig.org and sign-up to get weekly advice from its spokesman, Benjamin Banks.

Lesemann & Associates PLLC is a licensed certified public accounting firm and is registered with the North Carolina State Board of Accountancy

The following North Carolina counties will have a combined general State and Local tax rate of 7.00%:

• Alexander County
• Catawba County
• Cumberland County
• Duplin County
• Haywood County
• Hertford County
• Lee County
• Martin County
• New Hanover County
• Onslow County
• Pitt County
• Randolph County
• Robeson County
• Rowan County
• Sampson County
• Surry County
• Wilkes County

The following North Carolina county will have a combined general State and Local tax rate of7.25%:

• Mecklenburg County

Please note that generally in North Carolina, the applicable rate that should be used is determined by the point of delivery instead of the point of sale.  For example, if a company located in Charlotte sold and delivered product to a customer in Mooresville, the applicable sales tax rate that should be charged is 6.75%.  However, if that same customer picked up the product in Charlotte, the applicable sales tax rate would be 7.25%.

To see the actual notice from the North Carolina Department of Revenue Sales and Use Tax Division, please go to http://www.dornc.com/taxes/sales/impnotice0611_3.pdf

Well it is now official – the IRS has announced in Announcement 2011-40 that effective July 1, 2011, mileage rates for those that use the Standard Mileage Rate will now be $0.55 per mile for the rest of the year – 2011.

 In addition to the standard mileage rate for business expenses increasing, the standard mileage rates for medical and moving expenses will now be $0.235 per mile.

What is hard to understand, however, is why the IRS kept the standard mileage rate for miles driven for charitable organizations at $0.14 per mile.  Why this rate wasn’t increased can be argued from many angles.  Two of those angles are:

Angle #1 – Those that are benevolent minded will give money and donate their time regardless of the tax incentive to do so.  Therefore, why increase the mileage rate when it isn’t necessary?

Angle #2 – This is a deduction that is so widely abused that the IRS is attempting to limit its misuse by minimizing the per mile deduction.

From a reporting perspective, this will mean that the taxpayer will be required to keep and report deductible mileage in two groups:  Group #1 – January through June and Group #2 – July through December.

Many will remember having to do the same type of record keeping the year that gas prices skyrocketed after Hurricane Katrina hit the United States.  Some blamed the IRS for taking too long then and some will blame the IRS for taking too long now.  If you are the IRS, can you ever win?

Let us know your thoughts on this matter.  Is this increase too low?  Should the mileage rate increase be retroactive to January 1^st?

Background

When congress passed the Health Care Reform Act and the Small Business Jobs Act in 2010, both bills contained criteria that required, in short, a massive upheaval in the filing requirements for 1099′s – all earmarked as revenue generators to help pay for both of the bills.  These requirements were supposed to improve tax compliance and help pay for healthcare reform.  Small businesses and those that are self-employed complained strongly that these requirements would overwhelm them in paperwork and as some have said, put the final nail in the coffin for the small business owner. 

The Patient Protection and Affordable Care Act (aka – Healthcare Reform) had overturned the exemption of reporting payments to corporations.  Also included in the bill was the requirement that not only were payments of $600 or more for services required but now we would all have to prepare 1099s for those that we bought more than $600 of goods (this included items like office supplies, computer supplies, etc.).

The Small Business Jobs Act extended the reporting of rental income to include all service providers – in other words, individuals would have to report payments of $600 or more to landlords just like businesses currently do.

Many trade associations, including the American Institute of Certified Public Accountants (AICPA) and lobbying groups had pushed strongly for repeal of law.

Conclusion

While there are different views on how much revenue would be generated from this requirement, estimates suggest that that at least $19 billion was projected to come from these bills.  To cover this lost revnue, the President’s repeal included provisions that would limit and/or delay the highly touted health insurance tax credits.

Feel free to explore the new website.  We’re eager to hear your thoughts through our contact page.

Thanks for visiting our new Lesemann & Associates, PLLC, Huntersville CPA website!

You can have a refund check mailed to you, or you may be able to have your refund electronically deposited directly into your bank account. Direct deposit into a bank account is more secure because there is no check to get lost. And it takes the U.S. Treasury less time than issuing a paper check. If you prepare a paper return, fill in the direct deposit information in the “Refund” section of the tax form, making sure that the routing and account numbers are accurate. Incorrect numbers can cause your refund to be misdirected or delayed. Direct deposit is also available if you electronically file your return.

A few words of caution — some financial institutions do not allow a joint refund to be deposited into an individual account. Check with your bank or other financial institution to make sure your direct deposit will be accepted.

You may not receive your refund as quickly as you expected. A refund can be delayed for a variety of reasons. For example, a name and Social Security number listed on the tax return may not match the IRS records. You may have failed to sign the return or to include a necessary attachment, such as Form W-2, Wage and Tax Statement. Or you may have made math errors that require extra time for the IRS to correct.

To check the status of an expected refund, use “Where’s My Refund,” an interactive tool available on this Web site. Simple online instructions guide you through a process that checks the status of your refund after you provide identifying information from your tax return. Once the information is processed, results could be one of several responses, including:

• Acknowledgement that a return was received and is in processing
• The mailing date or direct deposit date of the refund, or
• Notification that the refund has been returned to the IRS because it could not be delivered.

New features on “Where’s My Refund” offer step-by-step instructions allowing taxpayers to trace their lost checks. Individuals now can change or correct their mailing address when their refund checks have been returned to the IRS as undeliverable. When you change your address online the IRS database is updated, and you will be given a date when your refund check should be resent.

The refund trace can be started 28 days after the date the IRS says the refund check was mailed. Married taxpayers who file a joint return must also complete and mail or fax a copy of Form 3911, Taxpayer Statement Regarding Refund. Both spouses must sign the form. Form 3911 is only required when the filing status on the return is married filing jointly.

Another way to check on your refund is to call the IRS toll-free Refund Hotline at 1-800-829-1954. This service is available to individual and joint filers who want to check the status of their current year refund.

If it has been at least four weeks since you filed your tax return, you can also check on the status of your refund by calling the toll-free IRS TeleTax System at 1-800-829-4477. When you call, you will need to provide the first Social Security number shown on the return, your filing status and the amount of the refund. If the IRS has processed your return, the system will tell you the date your refund will be sent. TeleTax refund information is updated each weekend. If you do not get a date for your refund, please wait until the next week before calling back.

1. If you do not file by the deadline, you might face a failure-to-file penalty.
2. If you do not pay by the due date, you could face a failure-to-pay penalty.
3. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return and explore other payment options in the meantime.
4. The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
5. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
6. You will have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.
7. If you filed an extension and you paid at least 90 percent of your actual tax liability by the due date, you will not be faced with a failure-to-pay penalty if the remaining balance is paid by the extended due date.
8. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.
9. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.