Archive of previous news items

Previous News Items

October 31, 2011 No parcel numbers on Schedule CA

Sources at the FTB have confirmed that they will not include lines on Schedule CA requiring information on property taxes deducted as itemized deductions.

September 23, 2011 New requirement for property tax deduction

The California Franchise Tax Board (FTB) is planning to add a section to Schedule CA of Form 540 asking taxpayers who deduct property tax as an itemized deduction to list the address and parcel number of the property. The form is currently only a draft, so this decision is not final. The draft version of Schedule CA requesting the additional property tax information can be found at: www.ftb.ca.gov/forms/drafts/11_540cadraft.pdf. The FTB is requesting information only for residences and other property used for personal or investment purposes (not for rental, farm or business purposes).

September 23,2011 Franchise Tax Board Clarifies Deductible Property Taxes

California conforms to federal law regarding a taxpayer’s real estate tax deduction. Taxpayers may deduct the tax if it is based on the assessed value of the real property and the taxing authority charges a uniform rate on all property in its jurisdiction. The tax must be for the welfare of the general public and not a payment for a special privilege granted or service rendered to the property owner.

Taxpayers may not deduct the amounts they pay for local benefits that tend to increase the value of their property (such as the construction of streets, sidewalks, or water and sewer systems). In other words, Mello-Roos taxes are not deductible and there may be other items on the bill that are not deductible.

However, amounts paid for maintenance, repair, or interest charges related to those benefits, are deductible. If only a part of the assessed amount is for maintenance, repair, or interest charges, the taxpayer must be able to show the amount of that part to claim the deduction.

Charges for services provided to the property are also not deductible. Taxpayers may not deduct any of the following charges as a real estate tax: -A unit fee for the delivery of a service, such as water; -A fee for vector control (e.g. mosquito control) -A periodic charge for a residential service, such as trash collection; or -A flat fee charged for a single service provided by the local government, such as mowing the property’s lawn.

IRS is Mailing Surveys to Taxpayers to Assess Burden

July 29, 2011 The IRS is seeking to better understand the time and cost burdens faced by taxpayers when complying with the many requirements imposed by tax legislation, regulations, and IRS filings, both in terms of time the taxpayer invests in complying with the requirements and any associated costs. To that end, the IRS Office of Research through an outside contractor, is sending surveys to the following categories of taxpayers to solicit information:

-Business Taxpayers – this has already begun;
-Individual Taxpayers – these are being mailed during August;
-Tax Exempt Taxpayers – these will be mailed in September;
-Post-Filing Burdens (after audits) – will be mailed in early 2012.

As we are constantly advising clients to make sure that they protect confidential information and identities, we wanted you to know that these surveys are from the IRS and are not a ruse by some marketing firm to solicit information. Participation in filling out these surveys is purely voluntary on the taxpayers part.

Federal debt limit debate

July 13, 2011 Social Security chief actuary confirms a decision to withhold checks would come from the Treasury Read about it here

July 12, 2011 The U.S. Treasury will not default. Despite all the rhetoric and posturing we see in the media and in Washington D.C., it is safe to say categorically that the U.S. Treasury will not default on its debt after August 2nd, even if the debt ceiling is not raised. Not only will the Treasury be able to pay interest on U.S. debt obligations, but there is Read about it here

IRS Announces Increase in Mileage Rates

Following sharp increases in gas prices, the Internal Revenue Service is revising the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining the reimbursed amount of these expenses that is deemed substantiated. (The mileage rate for use of an automobile as a charitable contribution is fixed by statute and remains 14 cents.)

The revised standard mileage rates are:

55.5 cents per mile for business use of an automobile
23.5 cents for use of an automobile as a medical or moving expense.

The revised rates apply to deductible transportation expenses paid or incurred for business, medical, or moving expense purposes on or after July 1, 2011, and to mileage allowances that are paid both (1) to an employee on or after July 1, 2011, and (2) for transportation expenses an employee pays or incurs on or after July 1, 2011. Announcement 2011-40 will be published in Internal Revenue Bulletin 2011-29 on July 18, 2011.