Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 683 other followers
  • Blog Stats

    • 311,702 hits
  • Posts By Day

    September 2022
    M T W T F S S
     1234
    567891011
    12131415161718
    19202122232425
    2627282930  
  • Subscribe

  • Special Pages

IRS Interest Rates Continue To Climb

Posted by taxguru on August 15, 2022

In spite of the Biden Gang’s attempts to pretend that there is no such thing as Inflation, IRS is required to adjust how much they charge for late payments and pay out for late refunds.

As of October 1, 2002, the rate will move from the current 5.0% APR to 6.0% APR.

Here is their official press release, announcing this:

IRS announces interest rate increases for the fourth quarter of 2022; 6% rate applies to most taxpayers starting Oct. 1

Three months from now, there will most likely be another IRS announcement of an even higher rate as of January 1, 2023.

For those people trying to maximize their return on investment, this presents an opportunity to earn much more than banks are paying. In earlier times when IRS interest rates were higher than bank savings accounts, I can recall some clients and others holding off on filing amended refund returns for longer than normal in order to accrue more interest from IRS. I’m not necessarily advising this, but just noting that it is a tactic that some people do in times like this.

Posted in inflation, interest, IRS | Comments Off on IRS Interest Rates Continue To Climb

Giving More Power To IRS

Posted by taxguru on August 7, 2022

There is no shortage of news coverage of the Dims’ proposals to give IRS billions more dollars in order to squeeze more money out of everyone. Here are some more humorous approaches to what we may have to deal with if the IRS’s wet dreams do come true.

From the August 2, 2022 episode of Gutfeld!



From Ben Garrison at GrrrGraphics:


From Rich Terrell:

From Lisa Benson:


From Dana Summers:



As I expected, my favorite satire group, The Babylon Bee, can’t resist pointing out some of the insane aspects of this new law.

New Bill In Congress Hires An IRS Agent To Live In Every Home

10 Ways To Avoid Getting Audited By One Of The 87,000 New IRS Agents

Saruman Breeds Army Of 87,000 More Tax Collectors

Report: By 2026 Everyone In U.S. Will Be Working For IRS And Will All Just Be Auditing Each Other

Gamers Eagerly Await The Release Of ‘Call Of Duty: IRS Auditor’

Want To Be One Of The New IRS Agents? Here Are The 17 Job Requirements

Biden Hires 87,000 Bused-In Migrants As IRS Agents




From A.F. Branco:

From Steve Kelley:

From Dick Wright:

Posted in comix, IRS, parody, video | Comments Off on Giving More Power To IRS

IRS Raises Standard Mileage Rate For Second Half of 2022

Posted by taxguru on June 9, 2022

IRS has released this press release with a slightly misleading headline today:

IRS increases mileage rate for remainder of 2022

Although the “remainder of 2022” includes the rest of June, the increased rates don’t take effect until July 1, 2022.

For Business purposes, the IRS allows 58.5 cents per mile for what was driven between 1/1/22 and 6/30/22 and 62.5 cents per mile for 7/1/22 through 12/31/22.

For Medical and Moving deductions, IRS allows a deduction of 18 cents per mile from 1/1/22 until 6/30/22 and 22 cents per mile for the second half of 2022.

For miles driven on behalf of charities, the rate remains fixed at 14 cents per mile because of the idiocy of our rulers in Congress who omitted any inflation adjustments.

Posted in inflation, IRS, Vehicles | Comments Off on IRS Raises Standard Mileage Rate For Second Half of 2022

Expect IRS To Increase Standard Mileage Rate

Posted by taxguru on May 20, 2022

In normal years, IRS adjusts its standard mileage deduction rate once a year for those taxpayers who don’t want to keep track of their actual expenses, as well as for employee reimbursements.

The standard rate, which has been 58.5 cents per mile for business purposes since the beginning of 2022, is intended to include the operating and ownership costs of an “average” car based on prior year (2021) costs. These include such things as fuel, insurance, oil changes, repairs, registration, washing, and tires. It also includes a factor for the depreciation of the vehicle.

Having been in the tax business for over 45 years, I can remember some years where fuel prices shot up as quickly as they are currently doing. In some of those cases, IRS increased their mileage rates mid-year. Sometimes this was as of July 1, while in other cases it was as of October 1. This meant that taxpayers had to keep track of and report their business miles separately for each time period.

I haven’t seen anything from IRS indicating that this will happen this year, but, given the insane price increases in gasoline and diesel we have been dealing with all over the country, it seems inevitable. The higher purchase prices for both new and used vehicles makes an increase in the depreciation component of the standard mileage rate also very likely.

Whether IRS raises its standard deduction rate or not, this is a perfect example of why it is important for everyone to keep track of their actual vehicle expenses because they will almost certainly be higher than whatever standard rate IRS allows for 2022.

Update 5/25/22: During today’s CPELink Monthly Tax Update, there was a mention of a recent letter that some CongressCritters wrote to the IRS Commissioner, requesting an increase in the standard mileage allowance to account for the drastic increases in fuel prices since 2021.
Press Release From Arizona Congressman
Copy of Letter

Posted in inflation, IRS, Vehicles | Comments Off on Expect IRS To Increase Standard Mileage Rate

IRS Interest Rates Continue To Rise

Posted by taxguru on May 20, 2022

Unlike most State tax agencies, which don’t ever change the interest rates that they charge on late tax payments (Arkansas has always been 10%) or adjust them annually (California, et al), IRS modifies its rates every three months to stay in sync with the overall financial markets.

As anyone would have expected, IRS has just announced that, as of July 1, it will be bumping up the rate it will be charging to 5% from the current 4%.

Here is their press release: IRS interest rates increase for the third quarter of 2022

If you want to consider a good side to this, besides charging taxpayers more on late tax payments, this also means that IRS will be paying taxpayers more for delayed refunds. Those millions of people who still have tax returns stuck in the IRS backlog of unprocessed returns will be earning much more from IRS than any banks are currently paying on savings accounts.

Posted in inflation, interest, IRS | Comments Off on IRS Interest Rates Continue To Rise

The Tax Season Bubble

Posted by taxguru on April 5, 2022

A perfect representation of how the two weeks leading up to Tax Day feel.

Posted in comix, TaxSeason | Comments Off on The Tax Season Bubble

Are IRS computer systems impossible to fix?

Posted by taxguru on March 9, 2022

Nobody should hold their breath expecting the wizards at IRS to get their act together with their computer systems any time this century.

A client just sent me this link to Americans For Tax Reform‘s handy list of just some of the IRS’s failed attempts to modernize their computer systems.

40 Years of Failure: IRS Unable to Fix Computer System

I remember 30 plus years ago, rather than hire outside tech experts to help them, they thought they could save money by drafting employees from various IRS departments, who had zero IT skills, to design more modern systems.  I don’t recall how many millions or billions of dollars they wasted on this project, but the whole thing had to be scrapped.

It may be amusing, but it’s definitely not funny when you consider how much money they have wasted and how much aggravation, expense and hassle their incompetence has cost all of us who are on the receiving end of their screw-ups.

Posted in computers, IRS | Comments Off on Are IRS computer systems impossible to fix?

Who knows when IRS will catch up with their backlog?

Posted by taxguru on March 5, 2022

This last item from the most recent issue of The Kiplinger Tax Letter is a bit depressing for all of us hoping that IRS will get back to normal in regard to processing returns and correspondence anytime soon.

“IRS will have trouble wiping out its backlog of 2020 returns and other filings,
despite its hopes of catching up amid the temporary personnel moves it made recently.
The agency shifted 1,200 personnel from other areas to assist with the backlog.
But there are over 20 million filings by individuals and corporations from last year
to sort through. IRS is begging Congress for more funding, but even if the agency
does get the money, any relief for taxpayers won’t be immediate. It will take months
or longer to hire new workers in this tight labor market and to onboard them.”

This will be the messiest Tax Season ever, to-date; something I have actually said each of the past two years.

Update 3/7/22
I’m much less optimistic about any timely resolution to the IRS backlog after reading the following in this morning’s newsletter from NCPE Fellowship.

“IRS to Hire 10,000 Workers to Help With Tax Return Backlog

The backlog includes at least 10 million individual tax returns and 4 million business tax returns going back to last year

The IRS is taking steps to relieve the backlog of tax returns.

The agency plans to hire 10,000 new full-time workers to play a direct role in that mission, according to Politico.

There are millions of unprocessed tax returns and other mail from individual and business taxpayers, according to the union that represents most of the IRS workforce.

The hiring process is scheduled to run through Dec. 31, 2023 and was first reported by the Washington Post.

In an effort to hire 5,000 new employees has fallen flat with less than 200 workers brought on board.

The new plan “sounds like an extension of that plan and its logic,” said Chad Hooper, president of the Professional Managers Association, a group that represents non-union personnel.

While he didn’t have the details of the plan, Hooper seemed skeptical about how easily it could be fulfilled.

“It’s unclear where the IRS believes these future employees are,” Hooper said.

There is a massive accumulation of paperwork going back to last year still awaiting processing, according to the report.

The mountain of paperwork includes at least 10 million individual tax returns and 4 million business tax returns, holding up refunds and credits going back to last year.

Starting this month, the IRS shifted 1,200 workers from their current jobs to deal with the backlog.

The IRS workforce currently sits at about 80,000, according to its website.”

Posted in IRS | Comments Off on Who knows when IRS will catch up with their backlog?

Funky Instrumental Version of “TaxMan”

Posted by taxguru on February 23, 2022

Although first released in 1966 by The Beatles, George Harrison’s song is still very timely and popular.

Thanks to the Ultimate Classic Rock website for this.

This has been added to my YouTube playlist of TaxMan covers.

Posted in Music, TaxMan, video | Comments Off on Funky Instrumental Version of “TaxMan”

Inflation Hits IRS

Posted by taxguru on February 23, 2022

Every three months, IRS looks at the current inflation rate and determines how much interest they will be charging taxpayers on late tax payments and paying out to taxpayers for delayed refunds. For the past seven quarters – since July 1, 2020 – it has been three percent (3.0%) APR. It’s not per day. It’s an annual rate.

As we all know, inflation is currently at its highest pace since Jimmy Carter’s reign. IRS has just announced in this press release that, as of April 1, their main interest rate will be a whopping four percent (4.0%) APR.

As I remind clients who are upset about the IRS’s lengthy delays in sending out refunds, their money will be earning a much higher return from IRS that it would in a bank, where they are still paying less than one percent on savings accounts. It’s the silver lining to a bad situation.

Three months from now, I expect to be writing a similar post about IRS raising their interest rate again, to five or six percent.

Posted in inflation, interest, IRS | Comments Off on Inflation Hits IRS