Month: December 2022

The Internal Revenue Service today issued the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
• 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
• 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

Notice 2023-03 contains the optional 2023 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2023 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.

The Federal Communications Commission (FCC) on Wednesday proposed a record-breaking fine of nearly $300 million for an alleged robocall scheme that involved billions of calls about auto warranties.

The agency said its proposed $299.997 million fine follows the largest robocall operation the FCC has ever investigated, alleging Roy Cox Jr., and Michael Aaron Jones made more than 5 billion robocalls designed to sell vehicle service contracts deceptively marketed as car warranties.

The pair allegedly began making the calls as early as 2018, placing 5.19 billion calls to 550 million phone numbers between January 2021 and March 2021.

The individuals allegedly spoofed the phone numbers of hospitals for some of the calls, which were placed during the pandemic, leading confused people to call the hospitals to complain. Other alleged calls originated from foreign entities but were spoofed to make the caller ID appear local to the U.S.

“The calls then misrepresented the product or service being offered and made false or misleading statements to induce call recipients to purchase goods or services,” the FCC said.

This past week, Congress forged an agreement to fund the federal government through an omnibus spending package that runs through September 2023. This package will include legislation that improves the tax treatment of saving, building on previous proposals introduced in the Senate and the House that change incentives to save and simplify the tax treatment of saving.

The previous proposals included the Senate Enhancing American Retirement Now (EARN) Act and the House Securing a Strong Retirement Act (SECURE 2.0), which were reconciled between the chambers prior to inclusion in the omnibus federal spending package.

These proposed reforms to retirement savings accounts in the omnibus federal spending package include the following major changes:

• Increases the required minimum distribution (RMD) age from 72 to 73 starting on January 1, 2023, and then to 75 beginning on January 1, 2033
• Requires many new 401(k)-style retirement plans to automatically enroll workers (automatic opt-in) with automatic contributions ranging from 3 to 10 percent starting in 2025
• Expands catch-up contributions for people aged 50 and over to 401(k) retirement accounts, raising the catch-up amount to $7,500 in 2023 and raising the maximum catch-up amount to $11,250 for those aged 60 to 63 starting in 2025
• Allows for employer emergency savings accounts alongside retirement accounts, which lets employees save up to $2,500 in Roth-style accounts for emergency savings
• Expands the saver’s credit by providing a 50 percent credit on savings up to $2,000 (for a maximum value of $1,000), which will be provided regardless of income tax liability starting in 2027
• Eliminates required distributions for Roth 401(k)s starting in 2024
• Standardizes rollover forms to enhance the portability of existing retirement accounts
• Allows for tax- and penalty-free rollovers worth up to $35,000 from 529 education savings plans into IRAs
• Provides more transparency for lump sum buyout offers
• Sets new limits on syndicated conservation easements

The proposal for emergency savings accounts is based on the Emergency Savings Act of 2022, offered by Sens. Cory Booker (D-NJ) and Todd Young (R-IN), which would give employers the option of establishing workplace emergency savings accounts for employees of up to $2,500 in contributions. The accounts would be treated on a Roth basis, meaning contributions would be made after-tax and withdrawals and any growth could be used tax-free at any time. Emergency savings accounts would help reduce the incentive to take a loan against or liquidate retirement accounts, which are also often subject to penalties for early withdrawals.

The changes within the retirement tax package share a common goal of improving incentives for households to save during a time when inflation is impacting their finances. The tax system currently encourages saving in a disjointed and complicated fashion, requiring households to understand the variety of rules and restrictions associated with different saving opportunities.

U.S. retail sales rose 7.6 percent during the holidays this year. The year-over-year bump recorded by Mastercard’s SpendingPulse tracker during the holiday period of November 1 through December 24 was lower than the 8.8 percent increase from 2020 to 2021.

Black Friday sales were up 12 percent from last year, and online sales were up 10.6 percent.

E-commerce made up slightly more of the total retail sales this year, 21.6 percent, than in the previous two years.

Restaurant dining was also up 15.1 percent year-over-year as the U.S. eases away from pandemic restrictions and consumers seek in-person experiences.

“Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings post-pandemic,” said Mastercard senior adviser Steve Sadove, the former chairman and CEO of Saks, Inc.

The state finished 2021-22 with a record high positive GAAP balance of $4.6 billion. The report found under Generally Accepted Accounting Principles, the state’s balance increased more than 300 percent from the end of the 2020-21 fiscal year.

GAAP principles are designed to reflect accounting practices in business and are different from what the state uses as the foundation for its budget process. The Department of Administration in November released a look at the 2023-25 budget, for example, that listed a gross balance at the end of 2021-22 of $4.3 billion.

The state had a GAAP deficit in the general fund of $773.5 million at the end of the 2018-19 fiscal year shortly after Evers took office. That was an improvement over the $1.3 billion GAAP deficit the year before.

“Wisconsin is in the best fiscal position we’ve ever seen, and this year’s remarkable increase is another positive indicator that we are headed in the right direction — toward a stronger, more secure economic future that ensures we can keep working to build a Wisconsin that works for everyone,” Evers said.

Joint Finance Co-chair Howard Marklein, R-Spring Green, noted the GAAP deficit was $3 billion when he was first elected to the Legislature a dozen years ago.

“We have made remarkable, consistent progress since Republicans have had control of the state’s checkbook,” he said.

The Comprehensive Financial Report also found:

*the state’s transportation fund balance increased $275 million to $1.3 billion at the end of 2021-22.

*long-term debt decreased by more than $365 million. That was driven largely by a drop of $183.3 million in outstanding annual appropriation bonds and repayments of general obligation debt exceeding new issuances by $102.1 million.

Senate leaders unveiled a $1.7 trillion year-long federal government funding bill early Tuesday morning.

The legislation includes $772.5 billion for non-defense discretionary programs and $858 billion in defense funding, according to a bill summary from Democratic Sen. Patrick Leahy, chair of the Senate Committee on Appropriations.

The sweeping package includes roughly $45 billion in emergency assistance to Ukraine and NATO allies, boosts in spending for disaster aid, college access, child care, mental health and food assistance, more support for the military and veterans and additional funds for the US Capitol Police, according to Leahy’s summary and one from Sen. Richard Shelby of Alabama, the top Republican on the Senate Appropriations Committee. It also includes several major Medicaid provisions, including one that could disenroll up to 19 million people from the nation’s health insurance program for low-income Americans.

However, the bill, which runs more than 4,000 pages, left out several measures that some lawmakers had fought to include. An expansion of the child tax credit, as well as multiple other corporate and individual tax breaks, did not make it into the final bill. Neither did legislation to allow cannabis companies to bank their cash reserves – known as the Safe Banking Act Act – or a bill to help Afghan evacuees in the US gain lawful permanent residency. Also, there was no final resolution on where the new FBI headquarters will be located.

The spending bill is the product of lengthy negotiations between top congressional Democrats and Republicans. Lawmakers reached a “bipartisan, bicameral framework” last week following a dispute between the two parties over how much money should be spent on non-defense domestic priorities. They worked through the weekend to craft the legislation.

The Senate is expected to vote first to approve the deal this week and then send it to the House for approval before government funding runs out on December 23. The bill would keep the government operating through September of 2023, the end of the fiscal year.

Millions of Wisconsin residents will be affected by two separate mergers of nonprofit hospital systems that were finalized earlier this month.

Gundersen Health System and Bellin Health completed a merger on Dec. 1. The next day, Advocate Aurora Health and Atrium Health did the same. Together, the mergers will impact about 8.5 million patients across several states.

Bellin and Gundersen will keep their respective names for the time being, as well as separate headquarters in Green Bay and La Crosse, while Advocate Aurora and Atrium will become “Advocate Health.” Marshfield Clinic Health System and Essentia health also announced merger talks earlier this year.

Hospital officials say the deals are aimed at improving patient care, and stem from organizations sharing similar missions and visions. But the mergers also have the potential to give hospitals more leverage to negotiate for higher prices with insurance companies.

However, University of Wisconsin-Madison Economist Alan Sorensen said mergers may give hospitals more leverage in negotiations with insurance companies.

He said insurance companies want to pay as low a price as they can negotiate, while health care providers want to get paid as much as they can negotiate.

“Those negotiations are enormously important for the bottom lines of these companies,” Sorensen said. “A lot of times what’s driving the mergers is that (hospital systems) feel like if they’re bigger, they’ll do better in those negotiations, they’ll have more bargaining power, they’ll be more indispensable to the insurance company.”

If health systems can negotiate for higher rates, he said, it could raise prices for patients.

“If the insurance companies have to pay higher prices to the hospitals, some of the increase is going to get passed through to the consumer in the form of higher insurance premiums,” Sorensen said.

The Public Service Commission of Wisconsin (PSC or Commission) is encouraging individuals to identify inaccuracies and challenge the Federal Communications Commission’s (FCC) draft of the national broadband map by January 13, 2023. Since unveiling the pre-production draft of the new broadband in November, the FCC has called on consumers, state, local and Tribal government entities, and other stakeholders can help verify the accuracy of the data.

The new map is the most granular and up-to-date federal map of where broadband is and is not available across the country. The FCC’s new broadband maps will be used to determine the allocation of Broadband Equity, Access and Deployment (BEAD) funds that Wisconsin will receive to build broadband infrastructure.

The new map is available at https://broadbandmap.gov/. Residents can type their address and check the map. If the information is inaccurate, residents can submit a challenge by filling out the Availability Challenge Form. Instructions are available at How to Submit an Availability Challenge on the FCC website.

On December 12, Governor Tony Evers and PSC Chairperson Valcq announced the state will receive more than $5 million to begin planning for the deployment and adoption of affordable, equitable, and reliable high-speed internet in Wisconsin through the BEAD and Digital Equity Act, under the Bipartisan Infrastructure Law. Wisconsin could expect an allocation of $700 million to $1.1 billion for broadband expansion under BEAD, depending on the FCC’s mapping data.

The PSC’s Wisconsin Broadband Office (WBO) submitted challenges to over 7,000 locations in the state, meaning the WBO identified homes and business that are missing from the map completely. But now, public participation in the availability challenge is essential. Wisconsinites’ input will improve the accuracy of the map and result in federal funding for broadband being targeted to the areas of Wisconsin that need it most.

The FCC recently published a National Broadband Map Outreach Toolkit with materials that are available for public use. The PSC’s Wisconsin Broadband Office is available to answer questions and share resources to assist individual in challenging the FCC map PSCStatebroadbandoffice@wisconsin.gov.

Consumers pulled back on spending in November, the Commerce Department reported Thursday. Retail sales for the month declined 0.6%.

The pullback was widespread across categories. Furniture and home furnishings stores reported a decrease of 2.6%, building materials and garden centers were off 2.5%, and motor vehicle and parts dealers dropped 2.3%.

Even with declining gas prices, service stations sales were down just 0.1%.

Online sales also decreased, falling 0.9%, while bars and restaurants increased 0.9%, and food and beverage stores rose 0.8%.

The Federal Reserve reinforced its inflation fight Wednesday by raising its key interest rate for the seventh time this year and signaling more hikes to come. But it announced a smaller hike than it had in its past four meetings at a time when inflation is showing signs of easing.

The Fed made clear, in a statement and a news conference by Chair Jerome Powell, that it thinks sharply higher rates are still needed to fully tame the worst inflation bout to strike the economy in four decades.

The central bank boosted its benchmark rate a half-point to a range of 4.25% to 4.5%, its highest level in 15 years. Though lower than its previous three-quarter-point hikes, the latest move will further increase the costs of many consumer and business loans and the risk of a recession.

More surprisingly, the policymakers forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023. That suggests that the Fed is poised to raise its rate by an additional three-quarters of a point and leave it there through next year. Some economists had expected that the Fed would project only an additional half-point increase.