Every year the Internal Revenue Service sends millions of letters and notices to taxpayers, but that doesn’t mean you need to worry. Here are eight things every taxpayer should know about IRS notices – just in case one shows up in your mailbox.

1. Don’t panic. Many of these letters can be dealt with simply and painlessly.
2. There are number of reasons the IRS sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.
3. Each letter and notice offers specific instructions on what you need to do to satisfy the inquiry.
4. If you receive a correction notice, you should review the correspondence and compare it with the information on your return.
5. If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
6. If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left part of the notice. Allow at least 30 days for a response.
7.  Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right corner of the notice. Have a copy of your tax return and the correspondence available when you call.
8. It’s important that you keep copies of any correspondence with your records

The Internal Revenue Service today issued the 2013 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, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• The standard mileage rate for transportation or travel expenses is 56.5 cents per mile for all miles of business use (business standard mileage rate).
•  The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization under § 170.
•  The standard mileage rate is 24 cents per mile for use of an automobile (1) for medical care described in § 213, or (2) as part of a move for which the expenses are deductible under § 217.

On October 13th I was a guest on WTTR Radio’s “The Carroll County Buzz”, the Most Unusual Financial Show on The Radio. I discussed some good news about taxes, and your best New Year’s Tax Resolutions. Vist WTTR’s website at www.wttr.com.

If you have or participate in an employer sponsored medical reimbursement program this is of importance to you.

Section 9003 of the Affordable Care Act, enacted in March, 2010, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs), Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).  Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan.

The new rule does not apply to items for medical care that are not medicines or drugs. Thus, equipment such as crutches, supplies such as bandages, and diagnostic devices such as blood sugar test kits will still qualify for reimbursement by a health FSA or HRA if purchased after Dec. 31, 2010, and a distribution from an HSA or Archer MSA for the cost of such items will still be tax-free, regardless of whether the items are purchased using a prescription.

In accordance with Section 9003 of the Affordable Care Act, only prescribed medicines or drugs (including over-the-counter medicines and drugs that are prescribed) and insulin (even if purchased without a prescription) will be considered qualifying medical expenses and subject to preferred tax treatment.

The changes are effective for purchases of over-the-counter medicines and drugs without a prescription after Dec. 31, 2010. The changes do not affect purchases of over-the-counter medicines and drugs in 2010, even if they are reimbursed after Dec. 31, 2010.

I hope you’ve had a pleasant, productive summer. I’m touching base to let you know I recently received some wonderful news. In its September  2010 issue, SmartCEO included me among the top 100 CPAs in the Greater Baltimore area. Every year, this publication asks its readers to nominate exemplary CPAs—leaders, innovators, and trusted advisors for the businesses they serve.

Great thanks to the Maryland Wineries Association, which recommended me for this honor. Kevin Atticks, the association’s executive director, generously remarked in his comments: “Ken is a small business’ dream accountant.”

As I always emphasize, though, providing reliable financial guidance and oversight for your company is only part of what we do. We always reach beyond that—making connections between your business and personal needs, looking to future issues, and linking the related concerns of your immediate family.

To provide the best possible service to you, I’ve spent the past 30 years refining that approach. I’m proud to say my reputation has been built on the one-to-one relationship I have with each of my clients.

A big thanks to everyone whose support and confidence made this award a reality. You truly do share in this honor.

That’s easy.  In fact, I can put it into four simple words:  Don’t put things off.

In staying on top of your finances, procrastination is always your biggest enemy, especially where tax planning is concerned. And now that a new tax season is on the horizon, there’s never been a better time to make certain that you’re tracking all of your expenses—especially those that could add up to big savings on your tax return.

Want a better return come April 15th?  Here’s my checklist of the top three expenses most people overlook at tax time:

Medical Expenses. And I’m not just talking about actual expenses.  Any incidentals, such as mileage back and forth to a doctor’s office, should also be added in.

Investment Activity. Make sure you keep an accurate cost basis on your stocks and bonds to track your gains and losses.  This is important especially if you switch brokers.  Your old broker may not forward the cost basis of your portfolio to your new financial advisor unless you specifically request it.

Charitable Donations. Keep solid, complete documentation on all of your donations over the last calendar year. For example, new IRS regulations require that you should receive acknowledgement letters from organizations that have received a donation from you.

Finally, make absolutely sure that you stay on top of recording all of your income over the year, even if it’s the smallest amount, like bank interest.  Not doing so on your return automatically will kick back a notice from the IRS.

So be proactive, keep good records, and you just may be looking at a better tax picture in 2010.