TaxConnections


 

IRS Audit Rates Continue Downward Spiral

IRS, IRS Audit, Individual Tax, Mile IQ, Tax Blog, TaxConnections

For years, IRS audit rates have been declining as Congress has cut the IRS budget and its workforce has shrunk. The agency has relapsed its audit statistics for 2017, which marked the sixth consecutive year that audit rates have gone down.

The number of people audited by the IRS in 2016 dropped to just over 1 million. The last time so few people were audited was 2004. Since then, the U.S. has added about 30 million people. Read More

Arkansas And Its Tax Climate

Arkansas Tax, Tax Climate, Taxation, Monika Miles, Tax Advisor, Tax Blog, San Jose, California, USA, TaxConnections

This month we travel to the southern state of Arkansas, the Natural State. It is known for its abundant parks and wilderness areas, with terrain encompassing mountains, caves, rivers and hot springs. The rugged Ozarks region in the northwest portion of the state has hiking trails and limestone caves, such as Blanchard Springs Caverns.

The state’s diverse geography varies from mountain ranges from the Ozark and the Ouachita Mountains, which make up the U.S. Interior Highlands, to the densely forested land in the south known as the Arkansas Timberlands, to the eastern lowlands along the Mississippi River and the Arkansas Delta. Read More

UK Tax: Get Up To Speed With The New Corporate Criminal Offences Legislation

Graham Purvis, Tax Advisor, Tax Blog, Newcastle, United Kingdom, TaxConnections

As of the end of September 2017 the government’s new Corporate Criminal Offences legislation has been in effect. Adding responsibilities with regards to facilitating tax evasion, it is important that all businesses are aware of what their responsibilities are, and how far-reaching the legislation is.

As stated in the introduction to the official government guidance, ‘The Government believes that relevant bodies should be criminally liable where they fail to prevent those who act for, or on their behalf from criminally facilitating tax evasion.’ The legislation aims to make it easier to link businesses facilitating tax evasion to the associated persons committing the actual offences. Read More

When Is It Time To Become A S Corporation?

Paul Mueller, Tax Advisor, Tax Blog, Loveland, Colorado, USA, TaxConnections,

For most new businesses and business owners, keeping it simple is key. After all, launching a new business requires attention to detail and doing many things right.  For that reason, most new businesses start out simply as a sole proprietorship or a Limited Liability Company (LLC).  As a successful business matures, however, the savvy owner should call time out to consider the S Corporation form of business.

The owners of an active business operating as a S Corporation enjoy a distinct tax advantage over other types of tax entities, particularly sole proprietors, partnerships and LLCs.  For the owner of a profitable sole proprietorship, partnership or LLC, the earnings are subject to both income tax and the 15.3% self-employment (SE) tax, which funds Social Security benefits and the Medicare health system.  This SE tax is often unanticipated, particularly for new entrepreneurs, and can cause havoc with cash flow at tax time. Read More

IRS Approves Extended Retirement Plan Distributions To A Trust

Mark Sommer, Tax Blog, Tax Advisor, Louisville, Kentucky, USA, TaxConnections
Many people want to leave the substantial wealth they have accumulated in retirement accounts in trust for their beneficiaries, rather than having the retirement accounts pass outright to them.  However, the IRS has established extremely complicated rules governing when retirement plan, IRA and Section 403(b) annuity contracts payable to a trust can be distributed over the life expectancy of one of the trust beneficiaries, rather than under the general five year distribution time limit.

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IRS Tax Discharge Explained

Mishkin Santa, Tax Advisor, Tax Blog, Austin, Texas, USA, TaxConnections

In some instances, tax liabilities can be discharged by filing bankruptcy. There are two main types of bankruptcy available (Chapter 7 and Chapter 13), each with definitive and complicated rules regarding discharging tax liabilities. In both instances, the following must be true:

  • Tax returns were timely filed or it has been at least 2 years since the returns were filed
  • Tax returns were last due to be filed for at least 3 years, including extensions
  • Tax liability was assessed at least 240 days before filing bankruptcy
  • Taxpayer did not pursue tax evasion or defeat
  • Tax liability is not due to a fraudulent tax return
  • Tax was not assessable at the time of filing bankruptcy
  • Liability is not due on Trust Fund Tax
  • Tax was unsecured

Read More

People With Special Circumstances Get Extra Time To File 2017 Taxes

Tom Kerester, Tax Blog, Tax Ambassador, Washington D.C., USA, TaxConnections

WASHINGTON — The Internal Revenue Service today reminded taxpayers that they may request an extension of time to file their tax return, but certain taxpayers get extra time without asking. The IRS said nearly 14 million taxpayers are expected to get an extension this filing season.

Anyone can receive a six-month extension to file their tax return by using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Even with an extension, taxpayers should remember that the extension does not affect any tax they owe. Tax payments are due on or before the April 17 tax deadline. Read More

Tax Advisor’s Guide On President Trump’s Executive Orders: URGENT! RESPOND BEFORE MAY 14, 2018

Tax Advisors would never know what was hidden in these regulations unless they conduct extensive research which we did for our members. We provide tax advisors our hours of research with links to the Code of Federal Regulations.

Based on a preliminary review, these proposals could be very far reaching and effect a wide range of our member’s clients. These proposals deserve your immediate attention and review.  You should study this very important information to make comments or request a public hearing on areas that may impact your clients. If you want to comment or request a public hearing you must do so before May 14, 2018.

Request your complimentary copy at this link: https://www.taxconnections.com/tax-advisors-reference-guide-on-president-trumps-executive-orders

 

National Taxpayer Advocate Nina Olson Testifies

Nina Olson, Taxpayer Advocate, Tax Blog, Washington D.C., USA, TaxConnections

National Taxpayer Advocate Nina E. Olson testified before the House Subcommittee on Health Care, Benefits, and Administrative Rules and Subcommittee on Government Operations Committee on Oversight and Government Reform on Oversight today at a hearing entitled, “Continued Oversight Over the Internal Revenue Service.”

As you know, I lead the Taxpayer Advocate Service (TAS), an independent organization within the IRS that advocates for taxpayers. TAS has two main functions – “case advocacy” and “systemic advocacy.” In most years our case advocacy operations
assist more than 200,000 taxpayers in resolving account problems with the IRS.2 On the systemic side, TAS identifies problems that are harming groups of taxpayers, and we make administrative and legislative recommendations to mitigate those problems.

Read More

Many Corporations Will Pay A Blended Federal Income Tax This Year Under The New Tax Reform Law

Tom Kerester, Tax Ambassador, Tax Blog, Washington D.C., USA, TaxConnections

WASHINGTON – Many U.S. corporations elect to use a fiscal year end and not a calendar year end for federal income tax reporting purposes.  Due to a provision in the recently enacted Tax Cuts and Jobs Act (TCJA), a corporation with a fiscal year that includes Jan. 1, 2018 will pay federal income tax using a blended tax rate and not the flat 21 percent tax rate under the TCJA that would generally apply to taxable years beginning after Dec. 31, 2017.

Corporations determine their federal income tax for fiscal years that include Jan. 1, 2018, by first calculating their tax for the entire taxable year using the tax rates in effect prior to TCJA and then calculating their tax using the new 21 percent rate, subsequently proportioning each tax amount based on the number of days in the taxable year when the different rates were in effect.  Read More

2018 Car And Truck Depreciation Limits Explained

Daniel Morris, Tax Blog, Tax Advisor, San Jose, California, USA, TaxConnections

For this year’s 2018 Depreciation Limits, business use vehicles offer opportunities and challenges. Claiming depreciation as a business expense for personally available vehicles is a clear advantage. As is common, a “but” is included due to special rules known as “Listed Property” attributes. These rules recognize there are both personal and business attributes associated with the same asset; the vehicle has a value to the individual and their business using the vehicle which has necessitated specific 2018 Car and Truck Depreciation Limits.

The conceptual challenge is that there are differences between a business van say, for a “Construction Person”, and the “Executive” with a new Mercedes, known as Listed Property. Read More

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