Tag Archive for Colorado

Colorado Now Accepts Crypto For Tax Payments

Colorado Now Accepts Crypto For Tax Payments

On 9/1/22, Colorado became the first state to accept cryptocurrency for all tax payments. There are many ways this could have been structured and I think the state picked an interesting one which I assume makes it easier for the state.

Payments have to come from PayPal Cryptocurrencies Hub. The PayPal account has to be a personal one rather than a business one. Per the DOR website on this:

“A sufficient amount of cryptocurrency to cover the tax, obligation and fees is converted to dollars and remitted to DOR to complete the online transaction. Service fees include an additional $1.00 plus 1.83% of the payment amount. You must have the entire value of your invoice in a single cryptocurrency in your PayPal Cryptocurrencies Hub. Effective on the date initiated, USDs will transfer in 3-5 business days.” [also see https://www.colorado.gov/revenueonline/_/#1]

Per the PayPal crypto website, you can buy, transfer or sell Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.

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Written by | Posted in Colorado Taxes • Pay Taxes With Crypto • TaxConnections

Colorado Sales Tax Nexus And Destination Sourcing Rules

Colorado Sales Tax Nexus And Destination Sourcing Rules

The Colorado General Assembly adopted SB21-282, which extends the small business exception to destination sourcing requirements. This exception applies only to businesses with less than $100,000 in retail sales.

As of February, 1st 2022 however, all retailers must apply the destination sourcing rules when calculating, collecting and remitting Colorado sales tax.  Basically, sales tax is calculated based on the buyer’s address when the taxable product (or service) is delivered and could involve multiple home rule taxing municipalities as well the Colorado Department of Revenue.

It is also used when a product or service has a lease/rental agreement with periodic recurring payments. The Department does not have the authority to grant exceptions to these rules.

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Written by | Posted in Colorado • Sales Tax Nexus

New State Tax Laws Effective October 1, 2019: What You Need To Know

Monika Miles

Are you curious what state tax updates are on the horizon? October 1, 2019 is a big date coming up; numerous states have new online sales tax provisions, amnesty programs and other legislative changes going into effect in just a few weeks. Keep reading for a quick summary of new laws and programs to keep an eye out for beginning next month.

Alabama’s Simplified Sellers Use Tax

As of October 1, Alabama requires remote retailers selling more than $250,000 in total sales (taxable and nontaxable) to begin collecting and remitting sales tax. Although sellers need to file their Alabama state tax returns monthly, these sales and use taxes fall into the “simplified” category because they’re a flat 8 percent on all purchases, regardless of the shopper’s locality in the state.

Arizona Eases Into Online Sales Tax

Arizona’s transaction privilege tax (TPT) is designed to ease the smaller out-of-state retailers into online sales tax compliance. As the Arizona Department of Revenue explains, the threshold for remote alleges to pay TPT is:

  • $200,000 in 2019 (beginning October 1)
  • $150,000 in 2020
  • $100,000 in 2021 and thereafter

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Written by | Posted in New State Tax Laws • Sales Tax

What You Need To Know About The Taxability Of SAAS In Nine Western States

Monika Miles

When it comes to Software-as-a-Service (SaaS) companies, there’s often confusion regarding both nexus and the taxability of this revenue stream.

And while the Wayfair decision seems like it’s directed only at online sellers, traditional multi-state sellers (including those that generate revenue from SaaS and software) are also affected, as nexus is now easier to establish. Once it is established – either by traditional physical presence or by sales volume – then companies will need to consider the taxability rules of SaaS in each state in which they have nexus.

Is SaaS even taxable? Because SaaS and cloud computing don’t always clearly fall into existing tax definitions, different states interpret its taxability in different ways. Some regard it as similar to electronically downloaded software, while others consider it a service, which may be taxable or not. And what about electronically downloaded software? Is it treated differently from SaaS?

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Written by | Posted in Monika Miles • SaaS Taxability

Year End Tax Planning For Individuals – Why It Is So Important This Year!

John Dundon- Tax Planning

Year End Tax Planning For Individuals

If you happen to be like me – desperately seeking any distraction from this holiday season – there is no better time than the present to start some year-end tax planning. Why is tax planning particularly important this year for almost EVERYONE? Basically the Tax Cuts and Jobs Act brought generational changes to the tax rules. The last time the tax code changed this dramatically was in under President Reagan in 1986.

  • People who thought the reporting under Obama Care was onerous are in for a surprise, a BIG surprise. Tax professionals and taxpayers alike are challenged with understanding these new laws and regulations. With the average age of the tax professional in Colorado being 68 years old, many are simply closing up shop. When it is time to engage you may find yourself out in the cold without adequate representation. Little is more disenfranchising than the discovery you handed over hard earned money to our esteemed authorities because your head was in the sand.

Yes – it might be the driest stuff you read all day. Yes -it will be worth the 3 minutes of your time to peruse.  Not all considerations below may apply specifically to you but they are worth knowing about and sharing with friends or family.

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Written by | Posted in Tax Planning For Individuals

Tax Planning Under The Tax Cuts And Jobs Act For Pass-Through Entities

John Dundon, Pass-Throughs And Tax Cuts And Jobs Act

Now that the Tax Cuts and Jobs Act (TCJA) is in full swing, many of you have been clamoring for tax planning strategies. This post addresses some essential aspects of the TCJA and suggests some strategic implications to be used for planning purposes.

One of the most significant changes coming out of the TCJA are the new tax rates:

  • The individual tax rate is reduced to a maximum 37%.
  • Tax rate for a pass-through entities can be reduced by 20%.
  • The corporate tax rate is reduced from 35% to as low as 21%.

As a result of these new tax rates there is a growing debate over whether a business should be organized as a pass-through entity or a full blown ‘C’ corporation.

Families with multiple businesses in various life cycle stages are compelled to think very carefully about tax implications associated with their ‘portfolio’ of business entities.
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Written by | Posted in Passthrough Entities • Tax Cuts and Jobs Act • Tax Planning

Federal Tax Deduction Allowed For Gluten Free Diet With Physicians Prescription

John Dundon, Gluten Free Diet Tax Deduction

Many people suffer from Celiac’s disease.  To be eligible to deduct the excess costs of a gluten-free diet under Internal Revenue Code Section 213, you must have a documented reason to require the observance of a gluten-free diet, along with a physician’s prescription to follow a gluten-free diet. This should provide sufficient documentation of eligibility.

The excess cost of gluten-free food can be deducted if you can deduct expenses paid for medical care for yourself, a spouse, or a dependent, to the extent the aggregate expenses exceed 10 percent of adjusted gross income.

If you meet both criteria above and choose to itemize deductions start collecting receipts and record them regularly. Download a spreadsheet from the Celiac Sprue Association for calculating the deductible expense.

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Written by | Posted in Gluten Free Diet Tax Deduction • John Dundon

How To Submit A Reasonable Cause Claim To The IRS For Penalty Abatement

If you have not filed your personal income tax form (1040), generally, you should get the tax form filed ASAP without consideration for the yet to be assessed penalties.

Then exercise patience.

Wait for the IRS to assess the penalty and then send a reasonable cause explanation to the address indicated on the notice from the IRS. This way you mitigate all sorts of procedural kerfuffles. Read More

Written by | Posted in Form 1040 • IRS

How Long Should Tax Records Be Kept?

A frequent question we get throughout the year is: How long should I keep records and tax returns?

Here is a helpful guide to follow:

1 Year
Monthly statements of investments until an annual statement recapping the year’s activity is available, bank statements, copies of checks used for tax deductible expenses and payroll statements until your W-2 arrives and you confirm the information matches.  Read More

Written by | Posted in Tax Forms • Tax Preparation • Tax Return

When Is It Time To Become A S Corporation?

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

Written by | Posted in LLC • S-Corp

Navigating The Shoals Of IRS Penalties

For those of us inclined to the proverbial ‘head-bury’ strategy with Big Brother, it is best to understand the civil penalties assessed when IRS systems catch up – as measured in tangible $$ out the pocket. For the brave of heart, navigating the shoals of IRS Penalties can be intimidating to comprehend but it is far from rocket science.

Understanding IRS civil penalties starts with picking up Part 20.1 of the Internal Revenue Manual (IRM).  Here you will find guidance on all areas of civil penalties imposed by the Internal Revenue Code (IRC).

Criminal penalty provisions are contained in IRM 9.1.3 and beyond the scope of this post. Read More

Written by | Posted in IRS

5 IRS Penalties Changed Under The Tax Cuts And Jobs Act Of 2018

This post contains cocktail party killer one liners about how 5 IRS Penalties Changed Under the Tax Cut and Jobs Act of 2018.

My editor also quipped that reading this post helps with insomnia as well. So if you are looking to either kill a party and/or fall asleep faster please continue reading.

If you are a tax practitioner however, you better know this stuff and with all due respect – most do NOT.

The 5 big changes are summarized as follows: Read More

Written by | Posted in Tax Cuts Jobs Act
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