TaxConnections Will Transform How Your Tax Expertise Is Discovered Online

We realize you are busy this time of year. However, we highly recommend you are alerted to the transformation occurring in the way people find tax advisors and tax services online.

TaxConnections has been introducing high-net-worth business executives to technically talented tax advisors for thirty years. View clients we have referred tax professionals on searches: https://www.taxconnections.com/tax-executive-search-services

TaxConnections transformation to AI will greatly impact how tax professionals connect with high-net-worth individuals, small and medium businesses, and multinational corporations. We are building our AI transformation around the relationships we have with tax advisors appearing on www.taxconnections.com. In other words, your tax expertise will surface in our A.I. search algorithm if you are a  TaxConnections Member or a TaxConnections Sponsor.

We suggest you position your firm Tax Advisors on the soon to be transformed to A.I. search technology. If you are not have a paid subscription on our platform, your tax services will not be found. When you join as a TaxConnections Member, you will appear as referred for new business on our platform.

To drive results and save resources, marketers are using AI to carefully target niche demographics, and optimize marketing campaigns based on valuable insights. Marketers are also
using behavioral targeting powered by AI marketing in front of the right people. Millions of taxpayers come to TaxConnections to find the right tax advisors with specialty expertise. Once AI is implemented (what we feed into our AI Brain), it will be easier for our visitors to find a wide range of specialty tax expertise and resources.

In Deloitte’s State of AI in the Enterprise, 3rd Edition, 26% of the people surveyed and 45% of AI adopters agree that AI has enabled them to gain a significant advantage over their competitors.

If you would like to have your tax services advisors receive referrals on the TaxConnections AI searches , please reply with a time to speak with you over the phone. We will ensure your visibility gains a  competitive advantage selling tax services. Request a Sponsor summary.

Early Adopters Get The Clients!

All the best,

Kat Jennings, CEO
858.999.0053 X100
www.taxconnections.com
View Kat Jennings BIO: https://www.taxconnections.com/Kat-Jennings-CEO/12257589/United-States/California/California/profilepage

Source Advisors, a market leading tax consulting firm provides R&D Tax Credit, Cost Segregation, §179D, §45L, ERC and LIFO inventory solutions nationwide for more than 38 years, has launched GOAT.tax, an automated research & development tax credit SaaS platform to service clients across a variety of industries. Many CPA firms now outsource its R&D Tax Credit services to Source Advisors who is providing white labeled outsourced services to public accounting firms.

With over 50 dedicated R&D tax credit professionals ready to provide support, GOAT.tax takes all the guesswork out of a complex tax incentive by offering an easy-to-use, self-guided experience along with payroll system integration. Their SmartCreditEngine crunches the numbers to make sure each company gets their maximum tax benefit.

“We are thrilled to be able to bring this automated software to the market. Launching GOAT.tax gives smaller businesses and start-ups the opportunity to learn about their eligibility for the R&D tax credit. GOAT.tax will service industries and companies that previously overlooked the possibility of claiming the R&D tax credit due to more limited research expenses. The SaaS platform compliments our current Source Advisors R&D tax credit practice, which will continue to provide best in class service to larger clients that want a more consultative approach,” said Chris Henderson, President of Source Advisors.

Would you like to outsource your firms R&D Tax Credit work to leading experts? Contact Eric Larson, Source Advisors. 415.730.5247 or Eric.Larson@SourceAdvisors.com.

Why Does An Economist Want To Raise Taxes To 70% – 80% ?(Using Celebrities And Athletes To Do So)

On January 6, 2021, TaxConnections posted our research of an Economist educating students on the importance of raising taxes to 70% – 80%. Fast forward a few years and we see taxes being raised by State Governors throughout the US to pay for services these states cannot afford. We want to remind you who is behind the new generation of education on tax hikes.

There is a Master Class being marketed to new generations of students online. This course teaches students they should rely on the government to take care of people; and raise taxes to 70% to 80%. The Master Class is taught by Economist Paul Krugman who states in the course preview  “When you are trying to be doing tax policy, the first thing you want to ask is, how much money do we need? How big a government do we want?” Klugman states “We need a tax system that collects a lot of money.”

What the Master Class does is use celebrities and famous athletes to communicate this message to a new generation of youthful taxpayers. The course promotes itself as learning from the world’s best entrepreneurs. It is using celebrities to motivate their students thinking to rely on the government. Take time to learn what Nobel Prize winning Economists like Paul Krugman is teaching in the Video: Understanding Taxes.  Look on Wikipedia to see who funded Master Class. It was Yanka Industries, and if you look deeper The Walt Disney Company is also investing in educating our kids:

MasterClass raised $100 million in a Series E investment round led by Fidelity Management & Research Company. Other investors include Owl Ventures, 01 Advisors and previous backers NEA, IVP, Atomico and NextEquity. This latest capital infusion “puts us on the IPO path,” says co-founder and CEO David Rogier. May 21, 2020

Read these links for more background information:

https://www.bnnbloomberg.ca/masterclass-seeks-funding-at-about-800-million-value-1.1431280

https://www.govinfo.gov/app/details/USCOURTS-cand-3_21-cv-04553

https://www.masterclass.com/find-my-classes/results?categories=70%2C133%2C148&wq=t&subcategories=76%2C137%2C152

TaxConnections Asks Tax Eagles To Look Out For Taxpayers

TaxConnections asks our tax professional community to have their voices be heard. TaxConnections provides a non – partisan platform for all voices on tax issues. We need your “eagle expert eyes” to stay on top of tax rules and regulations the public may not be aware of right now. Many tax professionals find clients caught in tax matters that had little transparency until the tax issue arose.

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Strong Majority Of New Yorkers Support Raising Taxes On Wealthy (According To Poll)

If you believe in Polls, we thought this article posted by Spectrum News was an interesting one!  We would like to hear from real people in New York what they think about raising taxes in the comments below. This poll was conducted by Siena College which is supported by the government.

“A strong majority of New Yorkers support raising taxes on wealthy earners and profitable corporations to fund public programs, according to a new poll commissioned by Invest in Our New York Campaign and conducted by Siena College that was released Friday.

The poll found 74% of state residents believe taxes should go up for the highest 5% of earners. About the same percentage of respondents, and 72% of upstate residents, believe raising taxes on the rich should be the solution to address any state budget shortfall rather than cutting services, according to the poll.

In addition, 64% of people, including 79% of Democrats, said they would favor a political candidate who supported raising taxes while 27% said they would favor a candidate who supported cutting spending to control state spending.

“Working-class New Yorkers, the people who wake up each day to strive for a better future for themselves and their families, continue to be the victims of budget cuts and diminished state resources. In the meantime, the ultra-rich continue to accumulate wealth. If our leaders do not intervene, the affordability crisis in New York will only get worse,” said Carolyn Martinez-Class, campaign manager at Invest In Our New York. “This poll affirms that most New Yorkers agree: it is high time that the wealthiest among us pay their fair share of taxes to ensure a thriving, equitable environment for everyone. Governor Hochul and our legislative leaders must answer the call of their constituents and include common-sense policies in the 2024 budget that raise taxes on the ultra-rich and invest in our communities.”

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Rental Property Owners Maximize Tax Savings Through Cost Segregation Studies
Cost Segregation For Short Term Rental Owners

As a short-term rental property owner, maximizing your tax savings is essential for the success of your investment. One effective strategy to achieve this is through cost segregation.

Cost segregation is a tax-saving technique that allows you to accelerate the depreciation of certain assets in your property. Traditionally, real estate is depreciated over 27.5 or 39 years, while personal property is depreciated over 5 to 7 years and land improvements receiving a 15-year treatment. Cost segregation allows you to reclassify certain components of your property, such as appliances, fixtures, and special use electrical & plumbing as personal property, enabling you to depreciate them over a shorter timeframe. This results in larger tax deductions in the early years of ownership, reducing your taxable income and ultimately lowering your tax burden.

The beauty of cost segregation is its versatility, it can unlock tax savings for a diverse range of short-term rental properties, including:

Urban Apartments

Studio apartments, lofts, and trendy condos catering to business travelers or weekend getaways can benefit from cost segregation on appliances, furniture, smart home systems, and even rooftop amenities like grills and hot tubs.

Shared Accommodations

Hostels, co-living spaces, and even shared vacation homes can leverage cost segregation for common areas like kitchens, bathrooms, laundry facilities, and entertainment zones.

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Constitutional Amendments – Amendment 16 – “Income Taxes

Amendment Sixteen to the Constitution was ratified on February 3, 1913. It grants Congress the authority to issue an income tax without having to determine it based on population. The official text is written as such:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

In the Constitution’s original writing, the Taxing Clause in Article I grants Congress the general authority to “lay and collect Taxes, Duties, Imports, and Excises.” For “direct” taxes, Article I commands that they must be collected based on the population of the states. Before an income tax was established, the majority of funds given to the federal government derived from tariffs on domestic and international goods. The short-lived Revenue Act of 1861 predated the Sixteenth Amendment as the first official federal income tax, but it was eventually repealed in 1872. The end of the 19th century saw the beginning of the Progressive Era, a time period in which political and social reform centered on industry, voting, immigration, and several other topical issues of the time period. Levying a federal income tax became a key goal for many progressive groups, the key argument being that it was fairer for wealthy individuals to pay for the taxes and tariffs that had been largely obliged from the middle class and the poor in society. Congress passed the 1894 Wilson-Gorman Tariff Act, which contained an income tax provision of 2% on incomes of over $4,000 (equivalent to $135,951.63 in 2022 U.S. Dollars). Supporters of this new income tax argued that it was not specifically a “direct” tax, which would require it to be apportioned among the states. Two previous Supreme Court decisions supported this theses, but the 5-4 decision in 1895’s Pollock v. Farmers’ Loan & Trust Co. ruled that the income tax in the Act was a “direct” tax. The core argument was that the income tax in the Act was sourced from deriving income from an individual’s property. Based on this, the Court asserted that “direct” taxes included any sort of income tax on rents, dividends, and interest, therefore making them legally required to be apportioned among the states. Read More

Illinois Governor Pritzkers' $899 Million In Tax Hikes On Individuals And Businesses

According to an article posted on www.illinoispolicy.org here is  a breakdown of Governor Pritzkers tax hikes on the citizens of Illinois.

“Here’s the breakdown of Pritzker’s $898 million in tax hikes on businesses and individuals:

  • Extending the cap on net operating losses. This would result in a $526 million tax hike for companies. Only two other states – Pennsylvania and New Hampshire – place caps on the amount of net operating losses a business can claim. Illinois’ corporate income tax rate is also the second-highest in the nation.
  • Increasing the sports gambling tax rate from 15% to 35%. Estimated to bring in an additional $200 million.
  • Capping the retailer’s discount on sales and use taxes to generate an extra $186 million. This is essentially a corporate tax hike on any business that sells a product that’s subjected to the sales tax, whether it’s Barnes & Noble or your local independent bookstore.
  • $93 million hidden individual income tax hike. This move will reduce the value of Illinois’ standard income tax exemption, subjecting an additional $225 of income to taxation per taxpayer and dependent. After years of rampant inflation, Pritzker is shortchanging the inflation adjustment on the state’s standard exemption for individual income taxes. By limiting the growth in the value of this exemption, Illinois taxpayers are facing a $93 million income tax hike. This tax increase would disproportionately fall on lower-income earners who receive a larger tax break from the exemption than higher-income earners.   

Pritzker’s $898 million in tax hikes bring in just enough to cover the growth (not total spending) for pensions and government worker health insurance. The total cost for these two items alone cost nearly $13 billion.”
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State Individual Income Tax Rates And Brackets, 2024

According to excellent research completed by Andrey Yushkov of the Tax Foundation, here are the key findings of state individual income tax rates and brackets, 2024.

  • Individual income taxes are a major source of state government revenue, constituting 38 percent of state tax collections in fiscal year 2022, the latest year for which data are available.
  • Forty-three states and the District of Columbia levy individual income taxes. Forty-one tax wage and salary income. New Hampshire exclusively taxes dividend and interest income while Washington only taxes capital gains income. Seven states levy no individual income tax at all.
  • Among those states taxing wages, 12 have a single-rate tax structure, with one rate applying to all taxable income. Conversely, 29 states and the District of Columbia levy graduated-rate income taxes, with the number of brackets varying widely by state. Hawaii has 12 brackets, the most in the country.
  • States’ approaches to income taxes vary in other details as well. Some states double their single-filer bracket widths for married filers to avoid a “marriage penalty.” Some states index tax brackets, exemptions, and deductions for inflation; many others do not. Some states tie their standard deduction and personal exemption to the federal tax code, while others set their own or offer none at all.

Individual income taxes are a major source of state government revenue, accounting for 38 percent of state tax collections. Their significance in public policy is further enhanced by individuals being actively responsible for filing their income taxes, in contrast to the indirect payment of sales and excise taxes.

Forty-three states levy individual income taxes. Forty-one tax wage and salary income. New Hampshire exclusively taxes dividend and interest income while Washington only taxes capital gains income. Seven states levy no individual income tax at all.

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California Crypto Currency Laws

The California Digital Financial Assets Law requires a digital financial asset transaction kiosk operator (“kiosk operator”) to comply with certain requirements that go into effect on January 1, 2024, January 1, 2025, and July 1, 2025.

Effective January 1, 2024

Effective January 1, 2024, the Digital Financial Assets Law requires a kiosk operator to: (1) provide a list of its kiosk locations to the Department of Financial Protection and Innovation (Department), (2) comply with daily transaction limits, and (3) provide receipts to customers with specified information for any transaction made at the operator’s kiosks.

Kiosk Locations

Effective January 1, 2024, the Digital Financial Assets Law requires a kiosk operator to provide the Department with a list of all locations of kiosks that the operator owns, operates, or manages in this state. The law also requires a kiosk operator to submit updates to the Department within 30 days of any changes to kiosk locations. Fin. Code, § 3906.

  • Who must report a list of kiosk locations?

    Anyone who owns, operates, or manages a digital financial asset transaction kiosk in this state must report kiosk locations to the Department. A digital financial asset transaction kiosk (“kiosk”) is defined as an electronic information processing device that is capable of accepting or dispensing cash in exchange for a digital financial asset.

  • When must a kiosk operator submit its list of kiosk location(s)?

    The law requiring a kiosk operator to report its kiosk locations to the Department becomes operative on January 1, 2024. The Department requests kiosk operators submit a list of kiosks to the Department no later than March 15, 2024.

  • How does a kiosk operator submit its kiosk locations to the Department?

    A kiosk operator can submit its kiosk location information to the Department by completing this Excel template with all kiosk locations and submitting it via the Department’s upload site.

    The Excel file must contain the following horizontal fields, in the order specified below, for each location:

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California Digital Assets Law
Licensing

Beginning July 1, 2025, companies must be licensed by the DFPI or have applied for a license with the DFPI to operate in California. The DFAL prohibits an entity from engaging in digital financial asset business activity unless the entity holds a license from the DFPI. Digital financial business activity includes activities such as exchanging, storing, or transferring a digital financial asset, such as a crypto asset. The new law promotes consumer and investor protection by creating a robust regulatory framework, including supervision and enforcement authority, for certain crypto activities.

Prospective Licensees

If you are a prospective DFAL licensee, or have a question about how the law affects your business, join our email list to receive future updates or email crypto@dfpi.ca.gov.

Kiosks

The Digital Financial Assets Law requires a digital financial asset transaction kiosk operator (“kiosk operator”) to comply with certain requirements in California.

Beginning January 1, 2024, a kiosk operator must provide the Department a list of all kiosk locations that an operator owns, operates, or manages in the state. An operator is defined as a person who owns, operates, or manages a digital financial asset transaction kiosk located in this state. Additionally, by January 1, 2024, an operator (1) may not dispense or accept more than $1,000 in a day to or from a customer via kiosks and (2) must provide a customer with a receipt with specified information for any transaction made at the operator’s kiosk.

Beginning January 1, 2025, kiosk operators must provide pre-transaction disclosures to customers and are prohibited from collecting from customers in any single transaction the greater of $5 or 15% of the U.S. dollar equivalent of digital financial assets involved in the transaction.

By July 1, 2025, operators must comply with the licensing requirements stated in the law. Learn more on the kiosk operators webpage.

How Is Software As-A Service(SaaS)Treated Under State Tax Laws?

A very important and often misunderstood area in the sales tax arena is the taxability of cloud computing, cloud-based services, etc., collectively often referred to as Software-as-a-Service (or SaaS). The moniker alone is enough to start the state tax conversation down an interesting path.

The Basics

When we work with clients to determine how something should be taxed, we start with a few basic questions and then work from there.

Has nexus has been created?
This includes looking at both the physical presence as well as an economic presence. Following the U.S. Supreme Court’s June 2018 ruling in South Dakota v. Wayfair, many states enacted economic nexus statutes which require sellers to collect and remit sales tax in those states based on sales or transactional thresholds. In this process we also look at when nexus was created based on physical presence or economic nexus.

Is the product taxable?
Once nexus is established, the sale of tangible personal property by a retailer to a customer in a given state is generally taxable. We start there, and then review the transaction to see if there are any exemptions that would cause the sale of the property to not be taxable.

Certain services are taxable. How does the state treat services?
We also look to whether, after nexus has been established, the taxpayer is selling any taxable services in the state. Many services are straightforward and are clearly either taxable or not. However, services such as data processing and information services are some of the interesting “catch-all” services now considered taxable by some states.

The Complications
Lein Withdrawal

A federal tax lien, sometimes called a “statutory lien,” is the government’s legal claim against a taxpayer’s property when the taxpayer neglects or fails to pay a tax debt. To provide notice to creditors, the IRS files a public document, Form 668(Y), Notice of Federal Tax Lien.

Internal Revenue Code (IRC) § 6323(j) provides the Internal Revenue Service (IRS) with the authority to withdraw a Notice of Federal Tax Lien (NFTL) under certain circumstances. A withdrawal removes the public NFTL, which assures creditors that the government is not competing with them for a taxpayer’s property. However, a withdrawal does not extinguish the taxpayer’s outstanding tax liability.

A taxpayer’s request for a withdrawal must be made in writing. Generally, a taxpayer requests the withdrawal using Form 12277, Application for Withdrawal of Filed Form 668(Y), and Notice of Federal Tax Lien.

The various scenarios in which the IRS may withdraw an NFTL are briefly discussed below.

Premature or Non-Compliant Filing

If the IRS’s filing of the NFTL was premature or in violation of IRS administrative procedures, it may be withdrawn. [1] Examples of such instances include but are not limited to:

(i) the filing of a NFTL in violation of the automatic stay in bankruptcy;

(ii) the filing of a NFTL while the taxpayer is in a Combat Zone; or

(iii) the filing of an NFTL by an IRS representative who knows or should have known about available credits.

Taxpayer Entered Into Installment Agreement

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