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Raised Mileage Rates, IRS’s IT Issues, and BBB Bombed?

IRS Raises Mileage Rates for 2022

The IRS issued new guidance deductions related to automobile costs through Notice 2022-03, with key changes including optional standard mileage rates, used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. Beginning on January 1st, 2022, standard mileage rates will be increased as follows:

  • $0.585 per mile for business use, up $0.0025 from 2021
  • $0.18 per mile for medical or moving purposes for qualified active-duty members of the Armed Forces, up $0.02 this year
  • $0.14 per mile in service of charitable organizations, the same as last year
Taxpayers are also allowed to calculate the actual cost of their vehicle as opposed to using standard mileage rates. Taxpayers are forced to use the standard mileage rate in the first year their car is eligible for business use, however, after this time they may choose standard mileage rate or actual expenses. Leased vehicles must also use the standard mileage rate method throughout the entirety of their lease if that was the method initially chosen.

IRS’s Internal IT Issues

Last week the Treasury Inspector General for Tax Administration released its 92-page report, detailing a mandated annual audit coming from the IRS Restructuring and Reform Act of 1998. This report reiterated how important it is for the agency to modernize its IT infrastructure, stating that two out of 5 function areas of the IRS’s Cybersecurity Framework were rated as “not effective.”

The two areas deemed ineffective was the agency’s ability to identify its cybersecurity risks and its ability to detect cybersecurity incidents. The three areas deemed “effective” were the agency’s ability to protect against cybersecurity risks, its ability to respond to them, and its ability to recover from them; although these areas were deemed effective the efforts had not been optimized according to the report.

Additionally, the report went on to detail why the IRS’s IT framework is so important, stating, “The trillions of dollars that flow through the IRS each year make it an attractive target for criminals who want to exploit the tax system in various ways for personal gain…” With the IRS in the midst of its first of two, three-year phases of a six-year IT modernization roadmap, we will have to see what advances are made to protect this data.

Build Back Better Blown Away?

Recently, we reported that Biden’s Build Back Better Budget might be bumped until 2022, however, the difficulty of passing the bill may have been underestimated. Senator Joe Manchin (D., W.Va.) whose opposition was previously holding the bill from passing has recently doubled down on his refusal to pass the current version of the bill, stating, “This is a ‘no’ on this legislation, I have tried everything.”

This is a huge blow to any progress that had been made into the bill recently, as Democrats have spent several months drafting and revising the package to win Manchin’s support. These revisions made now seem pointless as Joe Manchin still has concerns that the Bill’s spending will have a negative effect on inflation and his issue with how the cost of the Bill was calculated. Without Manchin’s support, the Build Back Better Act may never come to fruition, this is sure to play out in the new year, stay tuned to see how it unfolds.

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