A PTIN is a Preparer Tax Identification Number. Paid preparers of most federal returns must have one and include it on the return along with their signature in order to avoid penalties. The IRS can use the PTIN to track returns prepared by particular individuals (years ago they had to use the preparer’s SSN). PTINs are part of a system rolled out in 2010 where the IRS planned to regulate all preparers of individual returns and a few others. The system was found contrary to Section 330 of Title 31.
Archive for Annette Nellen
For the past few years, tax reform discussions have focused on broadening the base and lowering the rate. We are now hearing a bit more about consumption taxes including in the form of a credit invoice VAT like most of the world uses (in addition to their income taxes).
In recent years, federal tax reform discussions have centered on comprehensive tax reform. This label does not always seem to fit though. Congressional attention is mostly focused on broadening the income tax base to lower tax rates and to move to a territorial system, at least for business income. Tax reform is a significant task, last done 30 years ago with the Tax Reform Act of 1986. Assuming major tax reform happens only every few decades, it is important to do more than match revenue generated from the reduction of a few of the over 200 income tax preferences to reduced income tax rates. While this would improve the tax system, more work is needed to best ensure the creation of a modern and efficient tax system.
On August 24, 2016, the House Republican’s released the last part of their six-part vision/plan known as “A Better Way.” That part deals with tax reform. The plan offers some significant changes including moving business taxation to a consumption tax model at low rates (20% for corporations and a maximum of 25% for flow-throughs).
My Moving Forward? column in State Tax Notes for July 18, 2016 was on “Lessons from State Personal Income Tax Forms” ($). I looked at the personal income tax (PIT) forms and instructions as well as state tax agency websites for all 50 states and D.C. I also looked at how each state collects the consumer use tax. Most have a line on the PIT form; there are several variations among the states.
Here are a few suggestions I have for improving use tax compliance, which represents a significant tax gap for all states.
A review of a few recent sales tax advisory opinions, issued by the New York State Department of Taxation and Finance, reminds us of the complexities of sales tax exemptions and special definitions of taxed items.
The GAO released a report today called Tax Expenditures: Opportunities Exist to Use Budgeting and Agency Performance Processes to Increase Oversight (GAO-16-622). The report examines the estimated $1.23 trillion annual cost of special tax deductions, exclusions, credits and preferential rates AND how there is basically no oversight of these costs relative to discretionary budget items. Apparently, OMB and federal agencies were to review tax expenditures (there are over 150 of them) to see how they help agency goals. So far, only 11 of 169 expenditures were addressed representing less than one-third of the total cost.
In Information Letter 2016-0036, released June 24, the IRS explains general rules that might apply to someone’s receipts of funds via a crowdfunding platform. It doesn’t mention any websites, but examples include Kickstarter and GoFundMe. The IRS notes the broad rule of Section 61 that receipt of funds is likely to be taxable gross income.
On June 24, 2016, the House Republicans released their tax reform blueprint, the last part of their “Better Way” plan. The plan includes reasons for tax reform and the basics of the plan. There is no legislative language so the details are not all there. But, here are some highlights:
Tax issues for high tech—no doubt this will continue to be a hot area for many years to come. Changes in how we live and do business challenge existing tax rules.
This a key focus for this blog and my research.
A May 2016 GAO report released in May 2016 says a lot just by its title—Information Technology: Federal Agencies Need to Address Legacy Systems (GAO-16-696T; 5/25/16).
In spring 2014, the IRS issued Notice 2014-21, initial guidance on the tax treatment of virtual currency such as Bitcoin, from mining to its general use. The IRS explained convertible virtual currency is to be treated as property.