Tag Archive for Tax Blog

The Tax Reform Impact On Meals, Entertainment, And Automobile Parking

If you’ve formed certain habits related to how you handle meals, entertainment, transportation, and parking as it relates to your business and taxes, the time to change those habits has come.

As this report notes, tax reform law commonly referred to as H.R. 1 Tax Cuts and Jobs Act of 2017 has changed the deductibility of certain meals, entertainment and transportation expenses. Before 2018, a taxpayer could deduct 50 percent of business meals and entertainment and 100 percent of meals provided through an in-house cafeteria or meals provided for the convenience of the employer (i.e., also known as a de minimis fringe benefit). Read More

Written by | Posted in Entertainment Tax • Tax Reform

A Review Of Significant TCJA Provisions Affecting Small Businesses

Now that small businesses and their owners have filed their 2017 income tax returns (or filed for an extension), it’s a good time to review some of the provisions of the Tax Cuts and Jobs Act (TCJA) that may significantly impact their taxes for 2018 and beyond. Generally, the changes apply to tax years beginning after December 31, 2017, and are permanent, unless otherwise noted.

Corporate Taxation

  • Replacement of graduated corporate rates ranging from 15% to 35% with a flat corporate rate of 21%
  • Replacement of the flat personal service corporation (PSC) rate of 35% with a flat rate of 21%
  • Repeal of the 20% corporate alternative minimum tax (AMT)

Read More

Written by | Posted in Tax Cuts Jobs Act

2018 Tax Forums Will Feature TAS Seminars, Case Resolution Program

Each year the IRS sponsors the Nationwide Tax Forums, a three-day series of tax education and networking conferences for tax professionals in cities around the country. These events feature the latest information from the IRS, news about tax law changes, the chance to meet with software vendors, and the opportunity to attend nearly 50 seminars presented by IRS employees and members of professional associations.

At this year’s Forums, Taxpayer Advocate Service (TAS) will present a series of seminars, oversee the Case Resolution Program, and host two focus groups. TAS’s seminars include: Read More

Written by | Posted in IRS

Canada Tax: CRA Revised “Sprinkling” Proposals And What “Kiddie Tax” Really Means

The “sprinkling” proposals issued in July 2017 were amended in December 2017 effective for the 2018 taxation year.

As you may recall, the July proposals were designed to tax at the top rate, individuals now over age 18 who are in receipt on what is called “split income” or TOSI (tax on split income). Before 2018, the TOSI was called a “kiddie tax.”

For 2018, the TOSI rules extend to family members who are not active in the business that are receiving dividend income on any type of shares they hold and on capital gains on the sale of shares that are not qualified small business corporation shares. The pre-2018 rules applying to those under age 18 did not extend to capital gains on the sale of shares. Read More

Written by | Posted in Canada Tax • Tax Split Income

Corporate Executive Compensation Compliance: Unfunded Vs. Funded (Part I)

A nonqualified deferred compensation (NQDC) plan is an elective or non-elective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee or independent contractor compensation in the future. In comparison with qualified plans, NQDC plans do not provide employers and employees with the tax benefits associated with qualified plans because NQDC plans do not satisfy all of the requirements of IRC § 401(a).

Under a nonqualified plan, employers generally only deduct expenses when income is recognized by the employee or service provider.  In contrast, under a qualified plan, employers are entitled to deduct expenses in the year contributions are made even though employees will not recognize income until the later years upon receipt of distributions. Read More

Written by | Posted in IRS • Non-Qualified Deferred Compensation • TaxConnections

Sales Tax Consultant Having Success Recovering Georgia Sales Tax Refunds For Hospitals And Healthcare Industry

Georgia sales tax exemptions for healthcare providers, including hospital, clinics, and medical practice groups include several categories of purchases. One Georgia sales tax exemption for healthcare providers that a sales tax consultant from Agile Consulting Group has been recovering a significant amount of refunds for relates to prosthetic devices. Georgia Code Ann. § 48-8-3(54) states that prosthetic devices that are sold or used pursuant to a prescription are exempt from Georgia sales and use tax. Our sales tax consultant has learned that the prosthetic device may be purchased exempt from Georgia sales and use tax by a hospital, clinic, or medical practice group if it is sold or used pursuant to a prescription under federal or state law and title and possession is permanently transferred to a natural person to whom a prescription for the device is issued, per Georgia Comp. Rules & Regulations § 560-12-2-.30(5)(a). Read More

Written by | Posted in Georgia Tax • Sales Tax

The Latest In Online Sales Tax: Wayfair Vs. South Dakota Oral Arguments

Last week the U.S. Supreme Court heard oral arguments in the Wayfair v. South Dakota online sales tax case. While the court’s decision regarding the matter isn’t expected until June, the Justices’ questions in the matter reveal that it’s far from already settled, and they’re divided on whether or not Quill should be overruled.

South Dakota’s Arguments Regarding Quill

South Dakota’s Attorney General Marty Jackley began his statement, Read More

Written by | Posted in Online Sales Tax

The Truth On Accumulated Payroll Taxes

This is the absolute top of the food chain of priority cases for IRS Collection employees.

Succumbing to the temptation to use IRS as your involuntary banker is rewarded at best with steep penalties–not deductible, thank you–and interest charges that together make credit cards look like a bargain.

Prosecution is possible for severe offenders as this official Department of Justice News Release shows. In the criminal justice system, failing to turn over withholding taxes is considered just the same as embezzlement. Read More

Written by | Posted in IRS • Payroll Tax

More States Impose Sales Tax On E-Commerce Sales

Over the last few decades, states have had the opportunity to broaden their income and franchise tax base by ensnaring a larger proportion of out-of-state taxpayers in their taxing regime through adoption of broad economic or factor-based economic nexus standards.

However, states have traditionally struggled to do the same with respect to their sales and use tax base because of the long-standing United States Supreme Court nexus decision in Quill Corp. v. North Dakota (1992).” 1 For nearly three decades, the dicta contained in Quill have prevented states from adopting economic-based nexus
standards with respect to sales and use taxes, requiring instead a more stringent physical presence standard (or “substantial nexus”).
The Supreme Court has repeatedly declined to hear challenges or cases related to Quill, until recently. Read More

Written by | Posted in E-Commerce • Sales And Use Tax

2017 IRS Data Book Shows Chances Of Being Audited

The IRS has published the 2017 version of its annual IRS Data Book, which contains statistical information about the IRS and taxpayer activities during the previous year. The IRS Data Book helps illustrate the breadth and complexity of the U.S. tax system. According to the Data Book, during fiscal year 2017 (Oct. 1, 2016 to Sept. 30, 2017), the IRS collected overall more than US$ 3.4 trillion from taxpayers, processed more than 245 million tax returns and other forms, and issued more than $436 billion in tax refunds.

The IRS also audited almost 1.1 million tax returns during fiscal year 2017.  Almost 90% of the audited returns were individual income tax returns. While the percentage of overall returns audited was relatively low at 0.5% overall, the percentages were significantly higher for two types of taxpayers – wealthy individuals and individuals filing international returns. Read More

Written by | Posted in Audit • IRS

Newly-Revised Estimated Tax Form And Publication Can Help People Pay The Right Amount

WASHINGTON – With tax reform bringing major changes for the year ahead, the Internal Revenue Service today reminded the many self-employed individuals, retirees, investors and others who need to pay their taxes quarterly that the first estimated tax payment for 2018 is due on Tuesday, April 17, 2018.

The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. Among other things, the new law changed the tax rates and brackets, revised business expense deductions, increased the standard deduction, removed personal exemptions, increased the child tax credit and limited or discontinued certain deductions. As a result, many taxpayers may need to raise or lower the amount of tax they pay each quarter through the estimated tax system. Read More

Written by | Posted in IRS • Tax Cuts Jobs Act • Tax Reform • Withholding Calculator

What Is Wrong With IRS User Fees?

The IRS has been increasing user fees to fund its operations. It recently increased or proposed to increase a wide range of fees including the fees for installment agreements (IAs), offers-in-compromise (OICs), pre-filing agreements (PFAs), private letter rulings (PLRs), and special enrollment examinations (SEE). I raised concerns about these increases in my 2015 and 2017 Annual Reports to Congress.

On Feb. 9, 2018, Congress enacted the Bipartisan Budget Act of 2018 (P.L. 115-123), which addresses concerns about the IRS’s largest fee revenue generator – the IA fee increases. The law prevents the IRS from increasing the IA fee again without legislation. It also requires the IRS to waive or refund the fee for taxpayers with income below 250 percent of the federal poverty level who authorize the IRS to directly debit the IA payments (DDIA) from a bank account or who cannot set up a DDIA (e.g., because they do not have a bank account). This legislation suggests that Congress shares some of my concerns. This blog summarizes our concerns. Read More

Written by | Posted in IRS • Taxpayer Advocate • Taxpayer Rights • User Fees
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