TaxConnections


 

Senator Bernie Sanders Call For Senate Investigation of the Offshore Paradise Papers Leak

Ronald Marini, Tax Advisor

Senator Bernie Sanders (I-VT) called for the U.S. Senate to investigate offshore tax evasion following the revelations of the Paradise Papers, adding to the growing voices in Congress who have called for government to take action to address the investigation’s findings.

In a letter to Senate Budget Committee chair Mike Enzi (R-WY), Sanders called on the budget committee to launch a bipartisan investigation to determine how much the use of offshore havens has contributed to the U.S. national debt.

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Seven Benefits of Sales Tax Compliance Outsourcing

Aaron Giles, Tax Advisor

There are a variety of reasons it makes sense for companies to look for assistance with sales tax compliance outsourcing. Fast growth which makes keeping up with ongoing compliance requirements a challenge, turnover in key positions or an unfavorable audit experience resulting in significant liabilities are a few of the possible reasons we have heard from our clients. Regardless of the reason, many companies are making the decision to look for outside assistance with their sales tax compliance. Below are the seven benefits cited most frequently by our sales tax compliance outsourcing clients when asked about their experience:

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Why Impose An Inflation Tax?

William Byrnes, Tax Advisor

Raising our Taxes and Killing Social Security via the Republican’s Proposal for an Inflation Tax in Tax Reform

This so-called “Tax Reform” is going to raise our tax burdens while killing social security.  The Republicans have proposed, and Democrats have agreed, that actual inflation should not be recognized in future years, limiting inflation adjustments of tax brackets to increase tax on persons who earn more because of inflation, and decreasing social security benefits by half over 20 years.  This Tax Reform, besides reducing retirement opportunities for public employees, imposes “Chained CPI” (also known as the inflation tax) upon social security benefits to keep them from increasing and upon tax brackets to keep them from increasing as well. But tax brackets not increasing is bad for taxpayers. Tax brackets that do not move up to account for actual inflation require a higher tax rate be paid on future income as actual inflation pushes it into the next bracket.

I thought Republicans wanted lower taxes imposed on people who sweat and toil? Or do Republicans actually want lower taxes only on idle passive investors?

What if I like organic apples?

How’s that again? “Chained CPI” is sold as the savior of Social Security (see Heritage Foundation explanation). The example employed by Heritage in favor of Chained CPI: if apples go up in price, then consumers stop eating apples and eat cheaper oranges instead. What if I prefer apples? What if I am allergic to oranges? To my actual point: it is not a ‘choice of apples versus oranges world. It’s a choice between quality and cheaper (generally imported) goods. Chained CPI over time eliminates the local farmer’s organic apples in favor of the imported, genetically modified, pesticide grown cheap apples. Chained CPI requires that we reduce lean meat (sorry vegans) in favor of affordable fast food.

Chained CPI is a system built on forcing a degrading quality of life onto retirees. 

Compounded over time, it’s a choice between affording medication and going without medication, giving up restaurant dates with my spouse in favor of TV dinners. The monthly annuity from social security, as little as it is relative to a 15.4% pay-in of salary (albeit capped, but so are benefits) over 40 years, could be cut significantly over 20 years (see New Republic explanation) in respect to what it can actually buy in today’s terms. In 20 years when my generations retirees wake up to this death by a thousand substitutions, the monthly social security annuity is so relatively inconsequential, it won’t be worth discussing any longer. Worse, over these 20 years, our tax bills will increase annually via the Chained CPI bracket creep that keeps brackets from adjusting upward as our wages hopefully increase. So inflationary tax takes away our ability to try to mitigate the loss of our catchup retirement and social security. We MUST work, if able, until we drop dead, assuming that we are not substituted for a cheaper wage worker.

Retired, Older Experience Hirer Inflation Than Younger Population  

The Congressional Research Service has published a study that finds that elderly persons actually experience higher inflation than younger ones (see CRS Research Report A Separate Consumer Price Index for the Elderly?).  Instead of going the wrong direction to a Chained CPI, the CRS suggests a CPI for the elderly spending patterns to be called CPI-E.

Follow the impact analysis of the 2018 tax updates after these pass by a team of experts who will map out how these affect your clients and what planning you need to do – TaxFacts Online.

Have a question? Contact William Byrnes

Your comments are welcome!

The Impact Of New Tax Law on Mileage Deduction

MileIQ, Tax Advisor

The tax reform bill, officially called “The Tax Cuts and Jobs Act,” H.R. 1, was released on Nov. 2, 2017. The bill contains many provisions affecting both individuals and businesses. If you use your automobile or other vehicle for work or business purposes, read on to learn about how it could have an impact on your mileage deduction.

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Americans Who Have Renounced Their Citizenship Heading for Record Year

Ronald Marini, Tax Advisor

As many as 1,400 Americans have renounced their citizenship in the third quarter of 2017, according to US Treasury Department data. The trend suggests the total for 2017 will be more than 6,800, which is 26% above the 2016 total and 56% higher than 2015.

Americans are on pace to renounce their citizenship in record numbers in 2017, according to the latest quarterly report from the Treasury Department.

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Caring about “Sharing”: Why The IRS Should Do More for Participants in the Gig Economy

Nina Olson, Taxpayer Advocate

In this blog post, I will discuss how the IRS has been dealing with a growing sector of our economy called the “sharing” economy (also known as the gig economy). Proponents of the sharing economy believe it promotes marketplace efficiency by enabling individuals to generate revenue from assets while the assets are not being used personally. For example, a vacation home owner may rent out her home while she is not using it. Airbnb (short-term home rentals) and Uber (shared car services) are two of the more prominent companies that facilitate a sharing economy.

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International Tax Reform & Can Wealthy Americans Move to Virgin Islands and Not Pay Federal Capital Gains Tax?

William Byrnes, Tax Advisor

The Senate Finance Committee Modified Mark has published the modification to source rules involving possessions; the following is a description and analysis of the proposal:

The proposal modifies the sourcing rule in section 937(b)(2) by modifying the U.S. income limitation to exclude only U.S. source (or effectively connected) income attributable to a U.S. office or fixed place of business. The proposal also modifies section 865(j)(3) by providing that capital gains income earned by a U.S. Virgin Islands resident shall be deemed to constitute U.S. Virgin Islands source income regardless of the tax rate imposed by the U.S. Virgin Islands government.

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Claiming the Foreign Earned Income Exclusion when Filing a Late Return – What US Expats Need to Know

Hugo Lesser, Tax Advisor

The Foreign Earned Income Exclusion lets US expats exclude the first around $100,000 (the exact figure rises a little each year) of their earned income from US taxes.

It’s a great choice for many expats who earn less than this threshold, and sometimes a good option for expats who earn above the threshold too.

To claim the Foreign Earned Income Exclusion, expats have to file form 2555 with their annual US tax return. Form 2555 requires expats to prove that they live abroad.

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Tax Manager / Partnerships (Northern California)

Kat Jennings, Tax Advisor

The Tax Manager role requires partnership, S corporation, and high-net worth individual tax consulting/compliance experience and the skills to effectively diagnose clients’ needs in order to develop and implement solutions. Primary responsibilities involve providing tax compliance, tax accounting, tax research and planning for partnerships, S corporations and high-net worth individuals for sophisticated clientele. We will build upon your technical strengths in order to expand your expertise in other tax areas. Our firm builds well-rounded tax experts to serve a myriad of client needs which leads to continued professional growth. Our culture is to develop trusted tax advisors with sound judgement with the highest ethical standards in the profession. The Tax Manager/Partnerships will be responsible for a range of projects including:

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Message To President Trump From A Concerned Retired Tax Executive

TaxConnections Members provide valuable insight into tax reform proposals. As these new tax proposals make their way through the House and the Senate, it is important to learn from highly experienced tax experts who have their eyes on the implications of any changes proposed or made.

Tax professionals are the people you can trust who understand these tax proposals. There is no better expert to look to than a retired tax expert like Do Amirian who recently sent me a copy of his letter to President Trump regarding Tax Reform Per House Bill (62% Increase for the elderly).  Retired tax executives are people who have the time and experience to see through the consequences of any new tax proposals. We need to learn from years of tax expertise!

Kat Jennings, TaxConnections CEO

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Honorable President Trump,

The House will have significant adverse tax impact on the elderly, with significant medical expenses because of the elimination of the medical expense deduction.

For example, I, and my spouse Violet, will experience a federal tax increase of 62% under the House bill because of the elimination of the medical expense deduction.

Such a tax increase, an incredible 62%, is unconscionable under any standard of fairness.

Mr. President, please retain this critical deduction for the elderly, who count in the tens of millions of individuals.

Respectfully and success with your Administration,

Dro Amirian

Retired Corporate Tax Executive

Los Angeles, California

 

Have a question? Contact Dro Amirian

Your comments are welcome!

 

When Can A Non-Resident Spouse Be Treated As A Resident?

Manasa Nadig, Tax Advisor

As the tax reform debate rages on currently, I do not see much in the proposals changing for US citizens living abroad. As this story unfolds, I think it is a good thing that US citizens/ resident aliens living abroad are not affected. We shall wait and watch. For all the latest news-stay tuned!

As it happens many times for those US citizens who have moved abroad and married someone who is a citizen of their resident country, when times comes to file a tax return, they have to use the “Married Filing Separately” or the “Head of Household” filing status. Both of these may not be as advantageous as the “Married Filing Jointly” filing status tax-wise.

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12 Important Details: Sales Tax & Washington’s New Marketplace Facilitators

Monika Miles, Tax Advisor

We recently shared an overview of Washington’s New Marketplace Fairness solution. While we’re skeptical it will help rather than hinder, it’s important you know additional details about marketplace facilitators and sellers. Read on to get an overview of the marketplace, how sales tax comes in, as well as the collection and reporting of it.

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