Compliance September 12, 2005

IRS Increases Mileage Rate

September 12, 2005 (PLANSPONSOR.com) - In response to the spike in gas prices, the Internal Revenue Service has increased the optional standard mileage rates to 48.5 cents per mile for business miles traveled between September 1 and December 31, 2005.
Reported by

In an IRS news release, IRS Commissioner Mark Everson said, “With many predicting a decline in gas prices over coming months, we will hold off on setting the 2006 rate until closer to January.”   The IRS usually sets the rate in the fall for the coming year.

Gas prices as well as new vehicle prices and insurance rates are used to determine the mileage rate, the release points out.   The rate is used to calculate the deductible cost of operating a vehicle for business use.   Many companies also use the rate to reimburse employees for travel expenses.

Get more!  Sign up for PLANSPONSOR newsletters.

In addition, Rev. Ruling IR-2005-99 set the new four-month rate for computing deductible medical or moving expenses to 22 cents a mile.  According to the news release, the rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

Administration September 11, 2005

FASB Set to Consider Sweeping Pension Reporting Changes

November 9, 2005 (PLANSPONSOR.com) - The Financial Accounting Standards Board (FASB) is moving closer to its goal of revamping current reporting rules for pensions and other post-retirement benefits with a staff recommendation that companies be required to account for pension plan funding in calculating net worth.
Reported by

In material expected to be the topic of board discussion at Thursday’s meeting that was prepared by FASB staff members and posted on the  FASB Web site , the agency said the proposed stem to stern review of pension and post-retirement benefits is not expected to wrap up until the end of next year.

Staff members recommended that the board accomplish the pension reporting revamping in several phases, starting with deciding whether postretirement plans’ funding status should be accounted for in a company’s financial statement.

Get more!  Sign up for PLANSPONSOR newsletters.

During the first stage, staff members recommended the board require that:

  • companies recognize in their balance sheet a net postretirement benefit asset or a net postretirement benefit obligation for each sponsored defined benefit plan equal to the difference between plan assets measured at their fair value and the projected benefit liability (pensions) and accumulated postretirement benefits obligation (other postretirement benefits), measured as of the measurement date. FASB staff members asserted, “That would ensure an employer reports in the balance sheet the economic funded or unfunded status of its defined benefit postretirement plans.”
  • Changes in the fair value of plan assets and the benefit obligation that are not currently required to be recognized in earnings (unrecognized gains and losses) would be reported as credits or charges through other comprehensive income (OCI).
  • an intangible asset related to any unrecognized prior service costs be recognized consistent with the current requirements in Statement 87 when an additional minimum liability is recognized.

According the report, staff members recommend that FASB save the major rulemaking heavy lifting for the second phase of the project. That’s when the agency would “reconsider comprehensively most, if not all, aspects of the existing standards of accounting for postretirement benefits.”

The report said any FASB rule changes should be undertaken in concert with international accounting authorities who are developing new standards for companies around the world (See The Bottom Line: Let It All Hang Out ).

«