Archive for May 23, 2013

How You As A Tax Professional Can Help Influence The Internet Sales Tax Law

As a Tax Professional, you have the opportunity to influence the Internet Sales Tax Law. While Congress is on track to pass a nationwide Internet Sales Tax, you can make a significant contribution to improve it before it becomes law! The Open Government Foundation has designed an innovative platform for making line-by-line suggestions for improvements in the internet sales tax law.

TechCrunch has created a version of the “Project Madison” crowdsourcing legislative platform that enables readers to add, delete and amend specific passages in the upcoming tax law. Suggestions by tax professionals will receive the attention of Congressional Staffers. TaxConnections in support of TechCrunch needs your help to make a difference in this law – NOW!

Senate Bill S.743, the “Marketplace Fairness Act of 2013,” passed the Senate with overwhelming support and is on to the House of Representatives. TechCrunch launched a news civic channel to source and promote the most insightful ideas to pass on to government. This is a real opportunity to improve the Internet Sales Tax Laws while it has left the Senate and is on its way to the House of Representatives.

Here is exactly what you need to do: Read More

Written by | Posted in Tax Policy • TaxConnections

2013 Finance Act – Part 6 – Irish Tax System

This is a ten-part Worldwide Tax Blog Series on a cross section of amendments in the Irish Tax System and a general overview:

Universal Social Charge – Part 1

The Remittance Basis for Income Tax – Part 2

The Remittance Basis for Capital Gains Tax – Part 3

Taxation of Certain Social Welfare Benefits – Part 4

Mortgage Interest Relief – Part 5

Donations To Approved Bodies – Part 6

Farm Restructuring Relief – Part 7

FATCA – The US Foreign Account Tax Compliance Act – Part 8

Close Company Surcharge – Part 9

Stamp Duty – Part 10

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6. DONATIONS TO APPROVED BODIES

Prior to the Finance Act 2013, tax relief for donations was given in two ways:

1.  The self employed individuals and companies received a tax deduction for donations made to approved bodies subject to certain conditions.
2.  PAYE workers (employees paid through the PAYE system) did not obtain a tax deduction.  Instead the approved body applied to Revenue for a repayment as if the PAYE worker had made the donation net of tax at the individual’s marginal tax rate i.e. 41%.

The new provisions have resulted in: Read More

Written by | Posted in Europe, Middle East

Is Complaining About Taxes Politically Incorrect Now?

Phil Mickelson has been roundly castigated for daring to comment on the amount of taxes he pays. He calculates it at 63 percent. Others have said that he really only pays 53 percent (btw, I note that KPMG is his sponsor — couldn’t they tell him what percent of tax he pays?). Others say he should stop the “whining.” Apparently, it got so bad, he felt he had to issue an apology.

Where have we come to as a country that a person can’t complain that more than 50 percent of his income is skimmed by the government?

How Much Is Too Much?

Let’s go with 53 percent as the correct number. That’s just the tax on income. It doesn’t take into account sales taxes, property taxes, fuels taxes, and the list goes on. How much is too much? And what about the “tax” imposed on individuals and companies that must hire accountants (like PJCo) just to help them navigate the complicated tax world. It’s really getting to be ridiculous.

Federal taxes account for the biggest bite when it comes to income taxes. But state income taxes are a significant part of the overall income tax picture. And it’s not all about rates either. State income taxes present a much bigger level of complexity than the federal. Individuals and businesses have to also figure out where they should be filing tax returns. They may have nexus in another state by virtue of their own travels or by employee activities or even by Read More

Written by | Posted in Federal • Individual

Amazon Fulfillment Services Create Nexus!

Last year Amazon rolled out changes for sellers who use the FBA (Fulfillment by Amazon) service. A number of our clients were affected by these changes which raise issues on a number of topics such as shipping costs and delivery times. However the biggest issue we have to deal with has to do with sales and use tax nexus and the resulting tax collection responsibilities. People who sell using drop-shippers also have potential big sales and use tax issues to contend with.

Under this new FBA split-shipment policy, Amazon directs sellers to ship inventory to a number or warehouses in different places in the United States. Many companies are not aware that owning inventory in another state can be a nexus-creating activity. Once you have nexus in another state, then you have a sales tax collection obligation as well, provided the item sold is taxable and sold to a taxable person in the destination state. Also, the obligation to collect sales tax in that state applies to all sales in that state, not just the sales made through Amazon.

Amazon has distribution centers all over the U.S. Here are the locations according to Outright.com. For our clients, it has added another piece to the analysis of whether to use the FBA service. For one client, Amazon’s fulfillment charge Read More

Written by | Posted in TaxConnections

Credibility And The Voluntary Tax System

Our tax system is, at its core, a voluntary system. Since World War II we have had mandatory payroll withholding and quarterly estimated tax payments for the self-employed but it must be remembered this is not the payment of taxes. It is only a down payment on what we voluntarily self-assess ourselves when we file a tax return. We all know that some people voluntarily self-assess themselves large credits at the expense of other taxpayers.

A voluntary tax system is dependent on the credibility of the agency that is collecting the self-assessed taxes and making sure that the self-assessments are correct. In the 1960s the Internal Revenue Service was held up as a model government agency, a place you wanted to work. The credibility of the IRS has sunk to new lows due to the latest scandal to rock the Obama administration.

Today morale in the IRS is very low. Some of the reasons are that the IRS is under-staffed, under-funded and watching the revolving door as senior, experienced, people retire. The agency is grossly underfunded to handle its current workload, let alone the addition of the astounding amount of additional requirements imposed on it by Obamacare. Read More

Written by | Posted in Federal • Tax Policy

2013 Finance Act – Part 5 – Irish Tax System

This is a ten-part Worldwide Tax Blog Series on a cross section of amendments in the Irish Tax System and a general overview:

Universal Social Charge – Part 1

The Remittance Basis for Income Tax – Part 2

The Remittance Basis for Capital Gains Tax – Part 3

Taxation of Certain Social Welfare Benefits – Part 4

Mortgage Interest Relief – Part 5

Donations To Approved Bodies – Part 6

Farm Restructuring Relief – Part 7

FATCA – The US Foreign Account Tax Compliance Act – Part 8

Close Company Surcharge – Part 9

Stamp Duty – Part 10

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5. MORTGAGE INTEREST RELIEF

Prior to Finance Act 2013 Mortgage Interest Relief was due to expire at the end of 2012.

Section 9 Finance Act 2013 introduced transitional provisions in relation to mortgage interest relief which allows certain loans taken out in 2013 to be deemed to have been taken out in 2012.  These include: Read More

Written by | Posted in TaxConnections

The Tax Burden In America Is Not High Enough?

By a vote of 69-27, the United States Senate has passed yet another tax hike. Instead of curbing spending, they have decided that raising taxes on the Internet is the best way to pay the debt.

The bill aims to enforce a sales and use tax on businesses that rely on the Internet to reach their customers. While the specifics of the bill are about as long as Obamacare, here are the top three problems with the Internet sales tax:

•  Online businesses would be responsible for collecting and filing their sales tax from customers that don’t reside in their state.

•  Businesses would be forced to use software that will generate a database to keep track of their tax paying customers. This also puts their customers at risk should the database be hacked, spilling millions of sensitive personal information records into the wrong hands.

•  States might no longer seek to lower their taxes for business friendly environments. They’d be encouraged to raise their taxes in order to collect tax money from other states, thus hurting potential business development. Read More

Written by | Posted in Federal • Sales/Use Tax

2013 Finance Act – Part 4 – Irish Tax System

This is a ten-part Worldwide Tax Blog Series on a cross section of amendments in the Irish Tax System and a general overview:

Universal Social Charge – Part 1

The Remittance Basis for Income Tax – Part 2

The Remittance Basis for Capital Gains Tax – Part 3

Taxation of Certain Social Welfare Benefits – Part 4

Mortgage Interest Relief – Part 5

Donations To Approved Bodies – Part 6

Farm Restructuring Relief – Part 7

FATCA – The US Foreign Account Tax Compliance Act – Part 8

Close Company Surcharge – Part 9

Stamp Duty – Part 10

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4. TAXATION OF CERTAIN SOCIAL WELFARE BENEFITS

From 1st July 2013 certain Social Welfare Benefits not previously chargeable to Income Tax will come into the Income Tax net including:

1.  Maternity Benefit
2.  Adoptive Benefit
3.  Health & Safety Benefit

Revenue will now be permitted to amend tax credit certificates and standard rate cut off points to collect the tax arising on these benefits. Read More

Written by | Posted in TaxConnections

Say it Ain’t So: The MN Audit Guarantee

Audits by a taxing authority are not generally a pleasant experience.  Avoiding an audit is always a priority for taxpayers.  Generally there is a small chance you will be audited on any return and there is nothing you can do about it.  The State of MN came out saying they intended to audit all companies on sales tax once every three years and so far it seems they are following through with that.  But a one in three chance is still only 33%, so how do we get to a 100% audit rate?  Estate tax returns.

Estate tax returns are being looked at by agents.  In our experience, every single estate tax return is being looked at by a MN agent.  That’s the 100% audit rate that sounds like no fun.  So what happens in a MN estate tax audit?

The agents are looking to confirm the information that is on the estate tax return and they are checking against other information available on your possible assets.  Forget to report a car that has been registered with the State of MN?  They are going to ask you about it.  Fail to include an investment account that you received a 1099 for the year before?  They are going to ask you about it.  They are also going to ask for confirmation of some of the values you listed on the estate tax return like the bank accounts, the real estate values, the investment accounts, etc.  Having that documentation before you file the estate tax return is critical to making the process go more smoothly.  Calling the broker to find out the account value was $42,256.88 is great, but if you don’t have paper documentation of that, you aren’t going to get past the audit which is coming.  Not every post has a happy ending, but if you have all the documentation before you file the return and then reply promptly to the audit, it shouldn’t be too bad.

Written by | Posted in TaxConnections

Tips on Successfully Staffing Your Tax Department

In 2012, the Sales Tax Institute prepared and distributed a survey to 1,243 companies throughout the United States. The survey was sent to tax department vice presidents, tax directors, CFO’s, treasurers and controllers.  Our goal was to identify the best practices used by tax leaders, as well as helpful tips that could be shared with others. The survey results were used to benchmark attendees at the Institute’s Tax Leader Summit held in the fall of 2012. In this post, we will share some of the key findings of the research as well as some of the key takeaways identified by the Summit participants relating to staffing the tax department.

The most important component to being a “best-in-class” tax department is having the appropriate staff.  One of the keys to this success is to maintain appropriate staffing levels.  An equal number of our survey respondents felt their department was appropriately staffed as felt that it was understaffed. However, only 20% of the companies actually have their staff track their time, and only 32% track the tasks within the department with an estimate of the effort required. It is a best practice to have these types of processes in place in order to be more confident that your employees accomplish as much as possible in a given week.

Development of your staff through training is one of the foundations of a best in class tax department.  Training should Read More

Written by | Posted in TaxConnections

2013 Finance Act – Part 3 – Irish Tax System

This is a ten-part Worldwide Tax Blog Series on a cross section of amendments in the Irish Tax System and a general overview:

Universal Social Charge – Part 1

The Remittance Basis for Income Tax – Part 2

The Remittance Basis for Capital Gains Tax – Part 3

Taxation of Certain Social Welfare Benefits – Part 4

Mortgage Interest Relief – Part 5

Donations To Approved Bodies – Part 6

Farm Restructuring Relief – Part 7

FATCA – The US Foreign Account Tax Compliance Act – Part 8

Close Company Surcharge – Part 9

Stamp Duty – Part 10

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3. THE REMITTANCE BASIS FOR CAPITAL GAINS TAX

As with the Income Tax legislation, this new subsection provides that where an Irish resident, non-domiciled individual makes a transfer outside the state, of any chargeable gains, which would otherwise have been liable to Capital Gains Tax on the remittance basis, to his/her spouse or civil partner, any amounts remitted into Ireland on or after 13th February 2013 deriving from that transfer will be treated as having been remitted by the individual who made the transfer to his/her spouse or civil partner.

It is important to remember that the provisions apply to a remittance by the spouse or civil partner on or after 13th February 2013 which means that any chargeable gains historically transferred are within the scope of the new provisions of Finance Act 2013 where the remittance into Ireland occurs on or after 13th February 2013.

Written by | Posted in TaxConnections
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