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On January 12, 2018, the U.S. Supreme Court agreed to hear the Internet sales tax case South Dakota v. Wayfair Inc., case number 17-494, in the possibility of overturning a landmark decision almost 26 years ago, Quill v. North Dakota.
Does your nonprofit organization receive contributions of $250 or more? Does your organization provide goods or services to donors who make contributions over $75? If so, you will need to know the substantiation and disclosure requirements for charitable contributions.
On December 15, 2017, the conference committee reached an agreement to reconcile the discrepancies between the House and Senate tax bills. They released their compromised bill, which proposes sweeping changes for tax-exempt organizations.
Following is a summary of some of the key changes. Unless otherwise noted, the changes would be effective for tax years beginning after 2017. The House and Senate plan to vote on the bill the week of December 18, and it appears they secured the votes needed to have a bill in President Trump’s hands before the end of the year.
The Senate has released its version of comprehensive tax reform. The 479-page bill, like the House tax reform bill, proposes massive changes for tax-exempt organizations. Following is a summary of the key provisions that highlight the differences between the two versions. Now the bills are headed to conference committee to work out any differences. The information below will change as the bill progresses. The descriptions below are current as of December 2, 2017.
On Thursday, November 2, 2017, Ryan Laughlin and I will have the pleasure of presenting our annual tax update at the WICPA Tax Conference in Milwaukee, Wisconsin. This is Ryan’s second appearance at the conference. We’re going to have a blast spinning through the most important developments in Federal Taxation for 2017.
State governments continue to pursue remote sellers who sell to consumers in their state. Marketplace facilitators like Amazon’s Fulfillment by Amazon (FBA) assist online sellers to facilitate retail sales in states where they have no locations/employees. The facilitators maintain fulfillment centers in various states to store the inventory of the sellers. The maintenance of inventory by the online seller through a marketplace facilitator is sufficient to create nexus. Many online sellers are not aware of this fact.
Nexus is a concept that many businesses do not understand from sales/use tax and income/franchise tax perspectives. It is the minimum connection the state government requires in order to subject the company to sales tax collection or income tax liabilities. Nexus is established when a business has a physical connection with a state through employees, property, volume of sales, or other action.
Many smaller businesses that engage in research and development (R&D) haven’t been able to use the research tax credit because they pay little or nothing in income tax. That’s changed. In March 2017, the IRS issued guidance (Notice 2017-23) that provides information on the ways eligible small businesses can take advantage of this valuable credit. Rather than applying it against their income tax liability, they are able to apply the research tax credit against the employer’s portion of Social Security (or payroll) tax. This change stems from the Protecting Americans from Tax Hikes (PATH) Act, which was enacted in 2015.
A Colorado law passed in 2010 aimed at significantly increasing sales and use tax remittance in the state took effect July 1, 2017, after many years of litigation.
The Illinois General Assembly passed the state’s spending plan yesterday, July 6, with an override of Governor Rauner’s veto. The legislation enacts quite a few changes, which are a mix of tax increases and tax credit extensions. This post features highlights from the legislation.
If this bill also passes the Senate and becomes law, the Mobile Workforce State Income Tax Simplification Act (H.R. 1393) would simplify a national patchwork of interlocking state obligations for employers who send employees over state lines to perform work.
By Craig A. Cookle, Linda J. Feirn
The Wisconsin Department of Workforce Development Revenue has announced Wisconsin Fast Forward Grants for employers training existing or newly hired employees. These grant programs opened on June 9, 2017. Act now - the window of opportunity is closing!
The Internal Revenue Service has announced the annual cost-of-living adjustments for Health Savings Account (HSA) contribution limits for calendar year 2018. These limits apply for qualifying High Deductible Health Plan (HDHP) deductibles and out-of-pocket maximums. Plan sponsors should verify that their administrative and payroll systems reflect the appropriate limits.
There’s no doubt that hiring someone to regularly clean your home, care for your children or an aging parent, or maintain your yard has the potential to help your life run more smoothly. But to ensure things continue to run without a hitch, you need to stay on top of the relevant tax and reporting obligations — some of which can become quite involved. Here are a few highlights of the basic tax-related responsibilities associated with household help.
The House of Representatives has passed the AHCA, the bill to “repeal and replace” the Affordable Care Act (ACA). The bill must now pass the Senate. It cannot be filibustered by the Senate and needs only a simple majority vote to pass (50 votes plus Vice President Pence as the tiebreaker) because the bill is drafted as part of the budget reconciliation process.
President Trump announced the broad outlines of what he is calling “the biggest tax cut” in U.S. history on Wednesday. While the plan is short on specific details, it provides a clear indication that upcoming tax reform negotiations are going to center on simplifying the tax code and reducing business tax burdens.
A growing number of businesses have been victimized by W-2 phishing scams. In a traditional phishing scam, a criminal tricks someone into providing confidential information, and then uses it to steal money and/or the victim’s identity. The W-2 phishing scam is a variation on this.
After relatively low audit activity for Schedule F filers in recent years, it’s likely that some farmers may be receiving audit notices soon. The IRS’s Small Business/Self-Employed Division recently released a memo announcing a “Pilot Program Auditing Schedule F Expenses” (February 27, 2017). This memo outlines scrutiny surrounding expenses taken on Form 1040, Schedule F, Profit or Loss From Farming.
As you’re working on filing your 2016 tax return, you might be wondering what would happen if you were audited. It’s fair to say that most Americans dread getting word that the IRS intends to audit their tax returns. In fact, it’s unlikely most of us ever will — only a small percentage of individual tax returns are audited each year. Of these, more than half are correspondence audits, while the rest are field audits.
If your business regularly purchases products like personal computers, small equipment or mobile devices, you’ll be happy to learn that accounting for these transactions may now be easier. IRS Notice 2015-82, issued late in 2015, increased the de minimis safe harbor for deducting (rather than capitalizing) the amounts paid to acquire, produce or improve tangible property from $500 to $2,500 per item for small businesses that don’t have “applicable financial statements.”
In 2017 expect a surge in the number of sales tax reporting laws being enacted throughout the United States. States are looking for ways to combat significant losses of tax revenue from e-commerce transactions. Two hot button topics will be common throughout 2017 for states—seller notice requirements and economic nexus.
Recently we have had a handful of clients experience unexpected tax increases when they receive their property tax bills. In examining the facts, we have determined that the state assessors converted the clients’ leasehold improvements from nontaxable, as personal property, to taxable. Since the notice of assessed value issued in June was not appealed, the client has limited or no recourse to reduce the taxes billed in December of that year and payable by the end of January of the following year.
The Pennsylvania Department of Revenue has authorized a tax amnesty program that will run from April 21, 2017, through June 19, 2017. During this 60-day time frame, many individuals and businesses that have outstanding tax liabilities with the State of Pennsylvania can participate in the amnesty program and obtain relief from certain charges. For a limited time, Pennsylvania will waive half of the interest due and all of the penalties, liens, filing fees, and collection agency fees owed as of December 31, 2015, for eligible taxpayers.
In April 2016, Governor Walker signed into law an expanded occasional sale exemption that applies to nonprofit organizations. The provisions of the law took effect on January 1, 2017.
Many business owners use a calendar year as their company’s tax year. It’s intuitive and aligns with most owners’ personal returns, making it about as simple as anything involving taxes can be. But for businesses whose primary operating season doesn’t fall neatly within a single calendar year, choosing a fiscal year end can make more sense.
Nexus is a concept that many businesses do not understand from sales/use tax and income/franchise tax perspectives or in relation to those states which impose some type of entity-level tax on business receipts. Let’s define nexus: The degree of business activity or connection that an out-of-state business must have before a state can enforce a right to file and either collect or pay taxes. Nexus is established when a business has a physical connection with (or in some cases an economic presence in) a state through employees, property, volume of sales, or other action. Many businesses will address prior risk through either a voluntary disclosure agreement or a tax amnesty program and then register at the same time to ensure compliance on a prospective basis. This blog post will discuss each program.
Nexus is a concept that many businesses do not understand from sales/use tax and income/franchise tax perspectives or in relation to those states which impose some type of entity-level tax on business receipts. Let’s define nexus: The degree of business activity or connection that an out-of-state business must have before a state can enforce a right to file and either collect or pay taxes. Nexus is established when a business has a physical connection with (or in some cases an economic presence in) a state through employees, property, volume of sales, or other action.
Many collectibles are more sought after, and more valuable, than ever. But that value has tax consequences when collectibles are sold at a profit, donated to charity or transferred to the next generation. This article explains those tax consequences and some of the applicable IRS rules.
By Thomas Krieg, Keith Koszarek
Especially at this time of year, it is important to be grateful for the many gifts and blessings in our lives. As we reflect on that thought, there is one additional item to be thankful for this year: Internal Revenue Service (IRS) Notice 2016-70, https://www.irs.gov/pub/irs-drop/n-16-70.pdf. For employers subject to 2016 information reporting on Forms 1095-B and 1095-C under the Affordable Care Act, the IRS has granted taxpayers an automatic extension from January 31, 2017 to March 2, 2017, to furnish the forms to employees, without the need to file an application with the IRS. This is welcome relief.
Employers with employees who work in multiple states are often frustrated by the administrative burden and cost of compliance associated with proper multistate payroll tax withholding and compliance. It is equally burdensome for the employees, who are required to file returns in multiple states to meet their own state tax compliance burdens.
On September 21, 2016, the U.S. House of Representatives passed H.R. 2315, the Mobile Workforce State Income Tax Simplification Act of 2015. Supporters of the bill believe the law provides a reasonable solution to the myriad of state income tax withholding laws—and varying de minimis exemption periods—that make compliance extremely difficult and time consuming for employers and their employees.
On November 1, 2016, the IRS issued Notice 2016-66 (the “Notice”), which identifies certain “micro-captive transactions” and substantially similar transactions as “transactions of interest.” Taxpayers entering into those transactions (or who have entered into them since 2006) are required to disclose the transactions according to Treas. Reg. Section 1.6011-4, which are the tax shelter disclosure rules. Also, “material advisers” who are involved in such transactions will have to disclose and satisfy list maintenance requirements under Sections 6111 and 6112.
When is a loss actually a gain? When that loss becomes an opportunity to lower tax liability, of course. Now is a good time to begin your year-end tax planning and attempt to neutralize gains and losses by year end. As you do so, it might make sense to use any capital losses incurred in 2016 to offset capital gains that also occurred this year.
On Thursday, November 3, 2016, Ryan Laughlin and Rick Taylor will have the pleasure of presenting their annual tax update at the WICPA Tax Conference in Milwaukee, Wisconsin.
Before the end of the year, many business owners can take a few steps to ensure their businesses pay no more than their fair share of taxes. This article shares three tips that aren’t difficult to implement and could make a significant difference, including deferring income into next year or accelerating expenses into this year, and using the research credit.
By Thomas Krieg
When information on the new Forms 1094/5-B and -C series, reporting employee health coverage, is incorrect, the IRS considers it a failure to file a correct return or furnish a correct statement to the employee (i.e., failure to file). The 2015 filings showed that this is especially true with employee or dependent individual Taxpayer Identification Numbers (TINs), or in other words, social security numbers. The IRS may waive penalties if the failure to file is due to reasonable cause and not due to willful neglect. You can meet the reasonable cause standard in regards to social security numbers by following the procedure outlined in the most recent proposed regulations released by the IRS which is summarized in this post.
This blog post concludes our discussion of the taxation of software downloads by looking at Infrastructure as a Service and Platform as a Service. Infrastructure as a Service (IaaS) is a form of cloud computing that provides virtualized computing resources over the Internet. In a Platform as a Service (PaaS) situation, a cloud provider delivers hardware and software tools (usually those needed for application development) to its users as a service.
Software as a Service (SaaS), or “cloud computing,” is software that is licensed on a subscription distribution model in which a third-party provider hosts the applications and makes them available to customers over the Internet. This post discusses the taxability of SaaS.
Online software purchases are facing increased scrutiny during sales and use tax audit examinations. How closely do you monitor your online software purchases for compliance with state sales and use tax laws?
The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) significantly changed two depreciation tax breaks — Section 179 expensing and bonus depreciation — in ways favorable to many companies. To the extent possible, you’ll want to consider these changes when planning investments in depreciable assets.
The interest-charge domestic international sales corporation (IC-DISC) is one of the last remaining opportunities that can provide tax incentives for exporters. Historically, IC-DISCs have been used primarily by private companies, but public companies shouldn’t overlook this potentially significant tax break available through the creation of such a corporation. A properly structured and operated IC-DISC allows companies to defer taxes on as much as $10 million in export sales.
Last week, the IRS released long-awaited proposed regulations related to the valuation of interests in family-controlled entities such as family limited partnerships, corporations, limited liability companies, and others. The proposed regulations are broad and comprehensive. If the rules become final, the tax cost of transferring interests in family-controlled entries will increase sharply.
Even though Forms M-P and M-R were filed by April 1, the formal notices usually are not issued until early June. In April and May, the state assessors are desk auditing the return data and reviewing real estate sales and comparables. When the formal notice is issued, the property owner has 60 days to formally appeal to the State Board of Assessors.
If you miss this deadline, it is virtually impossible to adjust the value when the actual tax bill is issued in December.
By Kevin Janke
According to a memo from IRS Commissioner John Koskinen, the IRS will hire 600 to 700 new employees to focus on tax enforcement in the near future. With increased staffing levels comes increased scrutiny of gift and estate tax returns. It is likely that additional employees will allow more of these returns to be reviewed, resulting in more audits and challenges. This post will look at ways to prepare.
It’s not unusual for public companies to have the same firm perform their external audits and prepare their tax returns. But does this practice raise auditor independence issues?
The Bipartisan Budget Act of 2015, signed into law in November 2015, substantially changes the way the IRS may audit partnerships and, unless they’re not treated as partnerships for tax purposes, multimember limited liability companies (LLCs). The goal of the changes is to streamline the current partnership audit process.
IRS Notice 2015-79 represents the latest attack on corporate inversion transactions. According to the Notice, the IRS intends to issue regulations designed to make it more difficult for U.S. companies to invert and to limit the tax benefits of this strategy.
A vacation home can be a place to relax and recharge with family and friends. It also will impact your taxes, especially if you rent the home to others when you’re not using it. The rules are complex, so you should consult your tax advisor for details, but this post will give you a brief overview.
Periodically, I refer to certain taxes as poor orphan step children. By that, I mean they are the taxes that aren’t talked about, researched, measured, or evaluated. Our clients ask us to help them reduce their income tax, property tax, and sales tax burden, but few ask us whether there are means to ensure they pay the appropriate amounts of excise tax, no more or no less than what is required.
You probably just filed your tax return and have been looking forward to thinking about anything other than taxes for a few months. While that’s understandable, be aware that several important deadline changes have been made for some types of tax returns.
To encourage on-time filing and payment of sales and use taxes, states impose negligence penalties on any sales and use tax returns filed or paid late. The penalty amount can vary greatly from state to state and can be quite costly, with the penalty rate ranging from 1% to 30% of the tax due. For example, Minnesota imposes a penalty of 5% of the tax due on a return filed late, while Wisconsin imposes a penalty of 5% per month of the amount due up to 25% plus a $20 late filing fee. These penalties can add up quickly and can be very costly for a business.
Advertising services include the creation and development of websites, company branding services or advertising themes, production of radio or television commercials, obtaining media space and time, and email blasts. The taxability of services varies greatly from state to state. Many states have specific statutes or regulations that impose sales tax on certain enumerated services provided by advertising companies.
How closely do you monitor your advertising-related purchases for compliance with state sales and use tax laws? Advertising-related purchases are facing increased scrutiny during sales and use tax audit examinations. How confident are you that your advertising company is properly charging you sales tax on the items you purchase from it? Where might you have potential use tax exposure issues? Are you missing potential sales tax exemptions and overpaying sales tax on certain exempt purchases from your advertising vendor?
Since most companies have a calendar year-end, they are probably working to gather information to prepare their income tax returns. As this information is being gathered, it might be a good idea to analyze the data for its accuracy and whether other issues may be created by the information. Here are some best practices companies employ to reduce exposure and identify opportunities for state and local tax savings.
Tax-related identity theft can occur in many ways. First, a thief may steal someone’s Social Security number, file a tax return and fraudulently claim a refund. In fact, during the 2014 tax filing season, the IRS suspected and stopped more than 3.6 million returns filed by identity thieves. A victim of tax-related identity theft should work with the IRS to help remove fraudulent, inaccurate information from their account and ensure that their actual return is processed correctly. This blog explains how to do just that.
In an attempt to reduce energy consumption and expand the use of clean energy, tax credits enable taxpayers to lower their tax bill while taking a bit of the bite out of the initial investments in green energy systems. Businesses are not left out in the cold with respect to tax savings from energy tax incentives. This blog post will explore different ways that businesses can slice their tax bill.
The holidays are behind us. Decorations are put away. Winter has finally arrived with frigid temperatures, and with it generally comes higher heating bills. For some, this is what they have been waiting for because it is the first opportunity to test their home or building renovations or improvements. Over the last few years, the IRS has provided incentives for taxpayers to live greener, more energy-efficient lives. In an attempt to reduce energy consumption and expand the use of clean energy, tax credits enable homeowners and businesses to lower their tax bill while taking a bit of the bite out of the initial investments in putting green energy systems are in place.
Compensation to corporate shareholders is truly not that complicated, right? After all, your business deducts the wages, and the owner reports the income on his or her tax return. End of story. Not so fast. Compensation to corporate shareholders is one of the more scrutinized audit issues because the IRS and taxpayers may have competing interests. To make matters more complicated, the determination of the “correct” amount of compensation is situationally driven and impacted by everything from business results (which makes sense to most business owners) to what type of entity is paying the compensation (which may make sense only to a tax practitioner).
Normal tax rules are suspended in the case of certain sales between related parties. Related party sales generally create negative tax consequences for sellers including recharacterizing capital gains as ordinary income, denying installment sales reporting, disallowing realized losses and restricting the use of like-kind exchanges.
