Archive for Federal

The Independent Contractor Ranks Are Growing

The number of workers identifying themselves as “independent contractors” is growing in the United States. In 2005 the U.S. Bureau of Labor Statistics determined that the number of independent contractors rose from 6.4% of the workforce in 2001 to 27.4% of the workforce by 2005. In 2010, Navigant Economics claimed the following:

“More than 10 million workers, comprising 7.4 percent of the U.S. workforce, are classified by the Bureau of Labor Statistics as independent contractors, and another 4 million work in alternative work arrangements in which they may be legally classified as independent contractors for one or more purposes. Alternative workers in 2010 will account for approximately $626 billion in personal income, or about one in every eight dollars earned in the U.S.” Read More

Written by | Posted in Federal • Individual • Tax Provision/Tax Reporting

Time to Extend

Extensions for individual or business returns are relatively simple to complete, but they are becoming more and more important. If you filed your return already, you can probably stop reading this. For those who have not completed a return, I would consider an extension and keep reading…

An extension is an extension of time to file a return. It is not an extension of time to pay your tax. I repeat; it is not an extension of time to pay your tax liability.  For pass-through entities like S Corps or Partnerships, a federal extension doesn’t require any payment because generally those entities do not incur a tax liability. There may be liabilities on the various state returns the pass-through files. Read More

Written by | Posted in Federal • Income Tax • Individual • IRS • Partnership

The Senate Finance Committee Passes Tax Extenders For 2014 & 2015

On April 3rd, the Senate Finance Committee overwhelmingly approved the Expiring Provisions Improvement Reform and Efficiency Act of 2014 (hereinafter “EXPIRE”) with a strong bipartisan vote, setting the stage for Congress to address. The House Ways and Means Committee is expected to have its own extension package later this month. To that end and as a caveat, it is not certain whether any or all of these incentives will become law.

The bill extends many long awaited business tax extenders that originally expired on December 31, 2013 and modifies other certain tax provisions. Some of the key temporary tax benefits in this EXPIRE bill includes:

• 50% Bonus Depreciation & §179 Expensing Thresholds Return: The 50% bonus Read More

Written by | Posted in Federal • R&D Credit Services • Real Estate • Tax Provision/Tax Reporting

Application For Automatic Extension of Time To File U.S. Individual Income Tax Return – IRS Form 4868

Everyone starts getting a little freaked out this time of year because of personal income tax reporting and paying obligations due on April 15th. I have found through the years that this kind of pressure causes people in all walks of life to make poor judgments and less than fully informed decisions just to hit a deadline.

The point of this post is to inform you that it is okay to file an application for a six month automatic extension of time to file your United States individual income tax return and NOT TO WORRY IF YOU ARE BEHIND THE CURVE THIS YEAR. There are many reasons why you may need an extension of time to file your taxes that are all fully legitimate including:

1. life changing events, Read More

Written by | Posted in Federal • Income Tax • Individual • IRS • Tax Provision/Tax Reporting

Are You In It To Win It?

Fighting the Post-Bankruptcy Survival of Federal Tax Liens On Property That Is Excluded From The Bankruptcy Estate

The federal tax collection system is founded on the concept of voluntary compliance. The United States government expects taxpayers to compute and timely pay all taxes owed. Most taxpayers fulfill this obligation. However, a minority refuse to comply. Those falling within the latter category are subject to forced collection and various penalties. This article seeks to provide practitioners with an overview of the mechanics of the federal tax system’s forced collection scheme, with a special emphasis on post-bankruptcy survival of federal tax liens. Read More

Written by | Posted in Federal • IRS

The President’s Budget Proposal Attempts To Permanently Extend The Research And Experimentation Tax Credit

President Barrack Obama unveiled his $ 3.9 trillion Fiscal Year (hereinafter “FY”) 2015 budget proposal on March 4th. The President’s FY 2015 budget proposal reflects the framework set out in his 2014 State of the Union Address to promote job creation and economic growth. Clearly, the Research and Experimentation Tax Credit (hereinafter “RTC”) was a focal point of his budget as the RTC recently expired on December 31, 2013. It should be duly recalled that the RTC was originally added to the Internal Revenue Code (hereinafter “the Code”) in 1981 as a temporary provision of the Code at a time when research and experimentation based jobs were alarmingly declining in the United States and the RTC was designed to stimulate job growth and investment within the United States and its possessions (e.g., Puerto Rico and Guam). Read More

Written by | Posted in Federal • IRS • Tax Policy

Congressman Camp’s Tax Reform Act of 2014 Discussion Draft

As promised, Congressman Camp, Chair of the House Ways and Means Committee, released his tax reform plan – the Tax Reform Act of 2014. There is legislative language which helps to see exactly what the proposal is. In addition, there is a summary and an explanation of the rationale. The Joint Committee on Taxation released 11 documents that explain key parts and provide revenue estimates, a distributional analysis and a macroeconomic analysis.

I’m still digging into it, but a few quick observations:

• They estimate that this reform will grow the economy. For example, the press release states that 1.8 million new private sector jobs will be created and the “average Read More

Written by | Posted in Corporate • Federal • Income Tax • Individual

Senate Finance Committee Blank Slate Project 2013 – Senator Rockefeller’s Suggestions

Evaluation of Senator Suggestions for the Blank Slate Project

As noted in my 9/9/13 post, I’m going to summarize and analyze proposals senators offered to the Senate Finance Committee, and that the senator made public. Despite falling behind on my project, as tax reform likely heats up in 2014, I’m back at it as I’d like to look at and share what might be a broader array of proposals and issues. In no particular order, the second set of suggestions I’m commenting on are from Senator Rockefeller (D-WV) (7/26/13 letter). Senator Rockefeller is a member of the Senate Finance Committee.

Read More

Written by | Posted in Capital Gains • Federal • Gift Tax • Income Tax • OECD

Department of Treasury Issues Final Treasury Regulations Governing Employee Health Care Coverage

The Department of Treasury recently issued final treasury regulations (T.D. 9655 (2/12/14)) governing the implementation of the shared responsibility provisions for employee health care coverage required under I.R.C. § 4980H, as enacted by the Affordable Care Act. Pursuant to the employer shared responsibility provisions, if employers to whom the rules apply do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees and their dependents, the employer may be subject to an employer shared responsibility payment if at least one of its full-time employees receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges (e.g., Health Insurance Marketplace).

The employer shared responsibility provisions apply to employers that have 50 or more Read More

Written by | Posted in Affordable Healthcare Act • Federal • IRS

Broken Tax Code Offered As Reason For Tax Reform

The House Ways and Means Committee has a new website to promote tax reform. There is also a two minute video (see below). The three reasons for reform are interesting as to what they might mean.

1. Make the Tax Code simpler and fairer. The video notes that the getting “rid of junk” in the Tax Code would reduce it by about 25%. So, what does “junk” mean? I think there are several special rules that do not need to be in our tax law, but I’m doubtful as to whether they are considered part of the “junk.” For example, there is no reason to allow for interest expense deductions for a home equity debt or debt on a vacation home. These are also costly deductions. But, they seem to be popular, even though they are claimed by less than one-third of individuals. Read More

Written by | Posted in Federal • IRS • Tax Policy

Why Is It That The IRS Seems To Always Receive Budget Cuts When They Produce The Most Revenue?

On January 17, 2014, President Barack Obama signed into law the omnibus appropriations bill to fund the government through fiscal year 2014, bringing Internal Revenue Service funding below its 2009 level! The Consolidated Appropriations Act (H.R. 3547) allocates $11.3 billion to the Internal Revenue Service, which is a $526 million decrease, or 4.4% decrease from the previous year.

This makes the Internal Revenue Service one of the biggest losers in the 2014 budget deal, since the service would get just $11.3 billion, which is $526 million below its 2013 budget and $1.7 billion less than President Obama requested and is lower than its 2009 budget. Read More

Written by | Posted in Federal • IRS

What Is A “Qualifying Relative” For U.S. Tax Purposes: IRC 152

Wading through the convolution required to identify specifically who qualifies as a relative for income tax reporting purposes oftentimes can be difficult, not because the actual tax code is difficult to understand in these regards or even subject to much interpretation. No, it is difficult because the subject matter is best addressed with discretion gained only through experience, particularly in mixed company. In fact I charge hazard pay for the pleasure as the topic usually tends to incite cockles.

Today a husband/wife came in and the husband asked point blank whether “that mouth being feed across the table every night is a qualifying relative” for federal tax purposes. After picking myself up off the floor I proceed to explain as gracefully as possible that a qualifying relative is an individual who meets all of the following requirements: Read More

Written by | Posted in Federal • IRS • Tax Policy
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