If the price of oil and gasoline continue to rise, we would expect the standard mileage rate to be adjusted upward sometime this year. It would hold that since businesses utilizing the expense deduction method would realize a tax savings proportional to their operational costs, the IRS should extend that same consideration to those that employ the standard mileage rate.
This is not a novel idea. The same was done in 2005 and we urge that Congress immediately look into this issue. The self-employed and other small business owners are being hit much harder by this tax disparity since most of them use the standard mileage deduction.
It is estimated that each one dollar rise in the cost of a barrell of oil results in a 2.4 cent increase in the price of a gallon of gasoline. It is no wonder then that fuel has become so much more expensive. Oil prices, which are directly affected by demand and speculation combined with other government energy policies and world issues, do not look to decrease soon.
For more information on this subject we recommend the following news articles and web sites:
1. http://www.wtrg.com/ Analysis, planning, forecast and data services for energy producers and consumers.
2. http://www.philly.com/philly/business/20080425_Gas_prices_climb__crude_falls.html Gas prices climb; crude falls
3. http://www.financialpost.com/most_popular/story.html?id=469214 Gas, oil prices to double by 2012, CIBC economist predicts
4. http://www.mileagebooks.com Meanwhile, get a mileage log to maximize your tax deductions
Friday, April 25, 2008
Fuel Prices
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2 comments:
I suggest writing to your Congressman - it is an election year afterall.
This article at GovernmentExecutive.com , provides some insight as to how the standard mileage rate was raised mid-year after Hurricane Katrina. Apparently, this was a ruling by the IRS at the urging of Sen. Charles Shumer of New York.
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