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More States Impose Sales Tax On E-Commerce Sales

Blake Christian, Tax Advisor, Tax Blog, Long Beach, California, USA, TaxConnections

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

2017 IRS Data Book Shows Chances Of Being Audited

Ephraim Moss, Tax Advisor, Tax Blog, New York, USA, TaxConnections

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

Navigating The Shoals Of IRS Penalty Abatement – Types Of Defense (Part II)

Now that you may have missed the income tax filing and payment deadline perhaps it is a good time to understand how to cope with penalization as it can get woefully expensive – not to mention mind numbing – if you go about it have baked.

There are a handful of defenses you can attempt to assert when it comes to navigating the shoals of IRS penalty abatement, chose with care and proper counsel.

The key IMHO is to comport yourself with law abiding dignity whilst deliberately navigating through these general options, including: Read more

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

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

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

What Is Wrong With IRS User Fees?

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

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

Inflation Adjustments Under Recently Enacted Tax Law

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

WASHINGTON — The Internal Revenue Service has updated the tax year 2018 annual inflation adjustments to reflect changes from the Tax Cuts and Jobs Act (TCJA). The tax year 2018 adjustments are generally used on tax returns filed in 2019.

The tax items affected by TCJA for tax year 2018 of greatest interest to most taxpayers include the following dollar amounts: Read more

Curious About Entertainment Tax Rules In The United Kingdom?

Jane Swain, Tax Advisor, Tax Blog, Manchester, United Kingdom, TaxConnections

Eating out can take several different forms:

  1. Taking clients out for meals
  2. Buying refreshments for yourself
  3. Meeting clients/contacts for coffee
  4. Taking you staff out for meals/down the pub

Unfortunately slightly different tax rules apply to each.

Buying Refreshments For Yourself

The rule here is that if the food/drink is associated with travel then it is allowable. So, if you travel to London and stay the night in a hotel for the purposes of business, your evening meal is subsistence and so is a deductible expense. Read more

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

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