Charles Rangel, the chariman of the House Ways and Means Committee, helped  preserve a lucrative off-shore tax loophole for an oil drilling executive. This issue has prompted the House ethics committe to expand the inquiry on the matter.

Rangel is a powerful New York Democrat who insists the charges are false. But is it just coincidence that the businessman linked to the scandal pledged $1 million for a planned Charles B. Rangel Center for Public Service at the City College of New York?

Beyond suspicions about the offshore tax loophole worth tens of millions, the panel must look into Mr. Rangel’s use of congressional letterhead to solicit support for his eponymous center. Then there’s his use of rent-stabilized apartments in Harlem at cut rates and his failure to pay taxes and disclose $75,000 in income from a Dominican villa on which he enjoyed an interest-free mortgage.

The ramifications are great. It could lead to Rangel giving up his chairmanship while the investigation proceeds.  House speaker Nancy Pelosi is in a tough position - she needs to act on the matter on this Democratic party member.  She needs to urge Rangel to step down.  If he doesn’t, she needs to remove him.

Ethics violations by a public servant in such a high position cannot be tolerated.  His power in making decisions regarding huge fiscal and tax issues means there can be no doubts about the leadership’s priorities.

Each year, the IRS makes changes to it’s tax code. Here is a high level account of the changes to the IRS tax code for businesses.   I will try to capsulize the changes for each category. It is recommended that you talk to your tax adviser about the specifics if any of the following apply to you:

Depreciation and Section 179 Deduction
In 2008 you will be able to deduct the full purchase price (100%) of “qualifying equipment” that you purchased in 2008, but you must have purchased int the same year.

The limitations are that the maximum write-off is capped at $250,000.
And there is a cap of $800,000 for the total amount of the equipment purchased.  But if you’re purchases are over $250,000, you can get a “bonus” write-off in the same year equal to 50% of the balance leftover.  You can then write off the balance over 5 years (up to $800,000)
<a href=”http://truetaxfacts.com/2008-section-179-tax-changes-business-vehicles” target=”_blank”>Here is more information on this change</a>.

Meal Expenses When Subject to “Hours of Service” Limits
In general, you can deduct only 50% of your business-related meal expenses. However, for 2008 and later years, you can deduct 80% of meal expenses while traveling away from your tax home for business purposes if the meals take place during or incident to any period subject to the Department of Transportation’s “hours of service” limits.

The “hours of service” rule are set forth by the US Department of Transportation’s division of Federal Motor Carrier Safety Administration (FMCSA) governing the working hours of anyone operating a commercial motor vehicle (CMV). This includes truck drivers and bus drivers.

Self-Employment Tax
Beginning in 2008, $102,000 is the maximum amount of net earnings
There is no limit on the the amount of wages subject to the Medicare tax.

Social Security and Medicare Taxes
As stated above, the maximum amount of wages subject to the social security tax for 2008 is $102,000. There is no limit on the amount of wages subject to the Medicare tax.

Federal Unemployment Tax Act (FUTA) Tax Rate
The government has decided to keep the FUTA tax rate at the current 6.2% in 2008. It was scheduled to decrease two percentage points to 6.0% after 2007.

Maximum Automobile Value for Using the Cents-Per-Mile Valuation Rule
For employers who provide a auto, for the first time, for the personal use by an employee, the value of that personal use can be determined using the “cents-per-mile rule”. IF the fair market value of that vehicle is less than $15,000 for a car and $15,900 for a truck or van.

For more information, see Cents-Per-Mile Rule on page 20 of Publication 15-B, Employer’s Tax Guide to Fringe Benefits.

Fringe Benefit Parking Exclusion and Commuter Transportation Benefit
Employers can exclude some of the value of parking, highway credits and transits passes it provides to employees, from employees wages.

For 2008, the monthly exclusion for qualified parking increases to $220 and the monthly exclusion for commuter highway vehicle transportation and transit passes increases to $115.

Health Savings Accounts
Eligibility. For 2008, a qualifying high deductible health plan (HDHP) must have a deductible of at least:

• $1,100 for self-only coverage or
• $2,200 for family coverage and
• must limit annual out-of-pocket expenses of the beneficiary to $5,600 for self-only coverage and
• $11,200 for family coverage.

Employer contributions. Up to specified dollar limits, you can generally exclude your contributions (must be in cash) to the health savings account (HSA) of a qualified individual (determined monthly) from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. For 2008, you can contribute up to the following amounts to a qualified individual’s HSA.

• $2,900 for self-only coverage or $5,800 for family coverage.
• $3,800 for self-only coverage or $6,700 for family coverage for qualified individuals who are age 55 or older at any time during the year.

Nonqualified Deferred Compensation Plans
This topic is tricky and complicated. But in general terms, in 2008, final regulations are replacing many of the portions of the regulations regarding deferred compensations plans.   If you think you may be affected, contact your tax professional.

Penalty for Late Filing of a Partnership Return
Starting this year, the penalty for filing late as a “partnership” is increased to $86 for each month or part of a month (up to 12 months) the return is late or does not contain the required information, multiplied by the total number of persons who were partners in the partnership during any part of the partnership’s tax year for which the return is due.

Expiring Tax Benefits
Each year, certain provisions and tax benefits expire from the IRS Tax Code. However, Congress was expected to consider legislation that would reinstate many of these benefits. Go to www.irs.gov and click on “What’s Hot” in forms and publications for more information or talk to your tax adviser.

According to CBS News, for the second day in a row, Sarah Palin focused the entirety of her attacks against Barack Obama on the Democratic nominee’s tax plan, rather than his personal associations.

“Just yesterday, we learned that America’s GDP actually fell in the third quarter of this year, and that confirms what we already know, and that’s that our economy right now is shrinking,” Palin said. “This is the worst possible time to raise taxes, but Barack Obama still wants to.”

Palin repeated her mantra that Obama has “an ideological commitment” that compels him to raise taxes.

“Now, his whole tax plan, really, it is, it’s so phony that it’s already starting to unravel, and we’re gonna call it the way that we see it,” she said.

Palin said that Obama’s definition of what constitutes the middle class seems to be evolving.

“And just this morning, Gov. Bill Richardson, a top surrogate for the Obama campaign, he who is working so hard to get Obama elected, Richardson said Obama’s tax plan would define middle class as $120,000 a year and under,” Palin said. “So now, we’re down to less than half the original income level and, just give it a little more time, and Barack Obama will be back to raising taxes on folks earning $42,000 a year.”

Appearing on KOAM radio this morning, Richardson said, “What Obama wants to do is he is basically looking at $120,000 and under among those that are in the middle class, and there is a tax cut for those,” according to a YouTube clip of the interview.

Richardson’s comments appear to have been a slip of the tongue, since the Obama campaign has not announced that it has changed its policy that everyone making less than $200,000 a year would get a tax cut and no one making under $250,000 a year would be burdened with a tax increase.

There seems to be a lot of confusion about the Obama-Palin Tax Plan. The true definition of the Obama tax plan appears to be elusive; it seems that everyone has a different opinion of exactly who will pay more, and who will pay under the democrat’s plan. Is it “fair and balanced”? It depends who you ask!