Standard Mileage Rates for 2017 Announced

by Cory Hazy 4. January 2017 13:23
The IRS recently announced new optional standard mileage rates for 2017. The business rate has dropped again to 53.5 cents per mile, marking the second consecutive annual decline for that particular usage. Driving for medical or moving purposes is deductible at 17 cents per mile, a drop of two cents from 2016. The mileage rate for charitable organizations is 14 cents a mile, which has been fixed since 1997. This marks the fifth year in the last 16 that the rate for business mileage has dropped instead of risen. For further details, please visit the IRS Website.
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Hurricane Matthew Victims Receive Tax Relief from IRS

by Jim Dieterle 17. October 2016 09:00
Hurricane Matthew, which began October 4th, wrought havoc on the East Coast. Fortunately for many victims in the wake of its destruction, the IRS will provide tax relief. As with past natural disasters, specifically those declared a major disaster by the Federal Emergency Management Agency (FEMA), the IRS postpones certain deadlines for taxpayers living in or owning businesses in the affected areas. Specifically, deadlines falling on or after October 4, 2016 and on or before March 15, 2017 will be postponed to March 15, 2017. Also included are the quarterly payroll and excise tax returns due Oct 31st and Jan 31st. Additionally, the IRS will waive failure-to-deposit penalties for employment and excise tax due on or after October 4th, as long as they were deposited by October 19th. Details on available relief can be found on the disaster relief page on IRS.gov. The IRS automatically identifies taxpayers in the affected areas, but those that reside or own a business outside of that area that qualify need to call the IRS disaster hotline: 866-562-5227. More information can be found at: https://www.irs.gov/uac/irs-gives-tax-relief-to-victims-of-hurricane-matthew
Categories: Tax

Tax Court Ruling Expands Whistleblower Rewards

by Tim Marshall 9. August 2016 09:48
In a recent ruling by the U.S. Tax Court, two whistleblowers were awarded $17.8 million. This decision considerably increases the scope of what can be claimed, and could result in both larger awards and in more whistleblowers coming forward in the future. The IRS whistleblower program allows individuals with information about tax violations to file claims with the IRS confidentially, and it rewards those individuals with up to 30% of what the government collects as a result. This decision marks the first time a whistleblower received a portion of the criminal fines, civil forfeitures, and taxes that the government recovered, and it eliminated any concern by whistleblowers that they would receive less if the IRS pursued criminal charges rather than just tax collection. Note this ruling is recent, and can be appealed by the IRS. This was one of the largest awards ever. For context, award statistics for the most recent year show $103.5 million distributed in 99 awards.
Categories: Tax

The Nanny Tax–It’s Complicated, and it’s not just for Nannies

by Tim Marshall 21. December 2015 13:41
As the prevalence of households using in-home assistance increases, it is important to be reminded of the repercussions of the “Nanny Tax.” For instance, as our senior citizen population grows, more and more families are employing senior caregivers. If you hire a caregiver that is paid more than $2,000 per year, the IRS says you may be a household employer with the corresponding payroll and tax responsibilities – the Nanny Tax. Nanny tax compliance requirements can vary by state. For example in Pennsylvania the household employer must: withhold some taxes, such as unemployment ; pay the employer’s portion of Social Security, Medicare, and Federal and State unemployment taxes; file some quarterly tax forms; and, prepare and file some year-end forms including the W-2. The employer vs. contractor distinction is very important. Families that misclassify a household employee as an independent contractor (by providing the employee with a Form 1099 for filing taxes) can be charged with tax evasion, and be subject to penalties, interest, employer back taxes and employee FICA taxes. Apart from tax laws, there are labor regulations that require strict adherence as well, including workers’ compensation insurance, minimum wage and overtime compliance, and many others. Nationally, the lack of compliance with household employees has caused the IRS and the Department of Labor to collaborate to increase enforcement, so the issue is not going away. If you have household employees that may be subject to these regulations, we urge you to discuss it with a tax professional. In addition to the peace of mind that comes with compliance, a tax adviser might also discover some favorable tax treatments, such as with Child or Dependent Care Tax Credits. We’re here to help!
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Beware Tax-Related Identity Theft

by Jim Dieterle 16. December 2015 11:12
A recent study by the General Accounting Office found that nearly $25 billion in identity theft had been prevented by the IRS in the past year. That is the good news. The bad news is that in the same study the GAO reported nearly $6 billion was stolen from taxpayers through identify theft. For the unfamiliar, tax-related identity theft is defined by the IRS as: “when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund.” So what can you do to prevent this from happening to you? Here are a few tips: · Don’t keep your Social Security card or any document containing your SSN on your person · Only give out your SSN when absolutely necessary · Protect your personal computers and digital devices by using strong passwords and installing antivirus software. The problem is so pervasive that the IRS has published a Taxpayer’s Guide to Identity Theft. This provides guidance on reducing your risk, recognizing the warning signs that your taxpayer identity has been comprised, and what to do if that occurs.
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Employee Classification Under Scrutiny

by Steven Sodini 21. July 2015 14:02
The misclassification of employees as independent contractors is impacting a progressively larger number of companies and governmental entities in the U.S., and this trend is enhanced by an increase in restructuring activity by U.S. businesses. [More]
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IRS Updates Rules for Reporting Agents to Deposit Employment Taxes

by Tom Guappone 7. August 2012 10:00
The IRS updated the rules for depositing federal employment taxes. Taxpayers can now designate a reporting agent to make federal deposits for federal, social security and Medicare withholding taxes. Information on how to designate a reporting agent can be reviewed within Rev. Proc. 2012-32.   Rules for batch and bulk providers to make electronic payments on behalf of other taxpayers can be found by reviewing Rev. Proc. 2012-33.   Both Revenue Procedures will be published in Internal Revenue Bulletin 2012-35 on August 20, 2012.
Categories: Tax

30% of CFOs See Transfer Pricing as the Greatest Risk

by Dennis Stuchell 26. July 2012 15:40
Among 60 chief financial officers of companies with more than $1 billion in annual revenues, nearly one-third (30%) said that transfer pricing was their biggest tax-related challenge and risk, according to a new survey by Alvarez & Marsal reported by WSJ.com). Only four CFOs reported spending most of their time—and money—on transfer pricing issues, but the prevalent concern among respondents helped push transfer pricing to Number 2 on the survey of risk, just behind global compliance.   The higher risk profile for transfer pricing has resulted from increased attention by the IRS.  Intellectual property, including trademarks, trade names, patents, copyrights, and internally developed software, is increasingly being shared among multinationals. The IRS, under Sec 482, requires related parties to report transfer pricing at arm’s length. In this environment, a well structured corporate transfer pricing plan is essential to withstand IRS audit scrutiny. 
Categories: Advisory

What Is Next For the Individual Taxpayer Identification Number?

by Jane Lamberson 16. July 2012 14:30
Just when we thought we understood the complex set of rules  the Internal Revenue Service (IRS) had issued for nonresident aliens to obtain a taxpayer identification number (ITIN),  the IRS has announced  yet more changes.  These changes could affect many of the [1] nonresident aliens selling real estate in Southwest Florida and across the country, as they may find it harder than ever to obtain an ITIN number to transact business in the United States. On June 22, 2012 the IRS issued IR 2012-62, changing how ITIN numbers are to be obtained through the end of 2012. These interim changes are designed to strengthen IRS procedures for issuing numbers and are part of a comprehensive review of the ITIN processing procedures.   The new rules require that either: a) original documents be sent to the IRS along with the W-7 application, or b) certified copies of the documents must be sent from the issuing agency.  A key change is that a certifying acceptance agent can no longer merely certify that the nonresidents’ original documents are a true copy. The certifying acceptance agent must now send the certified copies to the IRS with the W-7 application. With the new regulations a nonresident alien will need a certified copy of their passport (or other acceptable documents) from the issuing agency in order to: a) sell US real property; and, b) file for a withholding certificate to get a reduced withholding tax based on, for example, a maximum tax liability calculation.   This means they will need to get the certified copy BEFORE they come to the US to transact any business that requires an ITIN number if they want to file a W-7 application for an ITIN number. Without the certified copy from the issuing agency, the only way to complete the application is to file with the original documents. In summary, it appears the new regulations will require every nonresident alien to get a certified copy of the required documents needed for the ITIN application process. (Of course there is always the alternative of submitting original documents to the IRS.)  That way if the need for an ITIN number ever arises, the required documents will be available. Keep in mind that certified documents are only valid as long as they are not expired.  With the many uncertainties of the ITIN program, I anticipate we may see a whole new application process in the coming year. Until then nonresidents will have more of a headache obtaining an ITIN number than ever before. Jane E. Lamberson, CPA is with the Naples office of Urish Popeck & Company of Florida, LLC and practices extensively in the area of International Taxation.  She currently is a certifying agent for ITIN applications for the Internal Revenue Service. [1] A limited number of prospective applicants are exempt from the process - military spouses and dependents without social security numbers who need an ITIN, and nonresident aliens applying to claim treaty benefits.   
Categories: Advisory

OK, it’s a tax. How will you collect it?

by Kelley Owen 10. July 2012 11:15
  In a 5-4 vote, the Supreme Court has upheld “Obamacare”.  Specifically, the court held that the individual mandate (that portion of the law that requires all Americans to purchase health insurance or pay a “penalty”) is not in reality a “penalty” but rather a tax; and, is therefore a constitutional application of Congress’ power to tax.   The court acknowledged that the mandate “is plainly designed to expand health insurance coverage,” and noted that “taxes that seek to influence conduct are nothing new” – case in point, taxing of cigarettes.  And, the court reasoned, the mandate does not make the failure to buy health insurance a violation of the law.  It merely requires a payment to the IRS for such failure.  However, the IRS may find itself hard pressed to actually collect this “tax”.  The tax has no criminal or civil penalties for failure to pay and no interest accrues.  And in essence, the only way for the IRS to actually collect the “tax” is to take it out of any refund that the taxpayer may have coming due.  So, if taxpayers manage their withholdings so there is no balance due from the IRS, the IRS has no way to enforce collection. The individual mandate is just one aspect of the Affordable Care Act.   The overall effect of the law on businesses, both large and small, on individuals, both rich and poor, must now be ferreted out and implemented before the many deadlines come due.  Stay tuned…..  
Categories: Tax