During Small Business Week,

IRS urges businesses to make estimated tax payments so they don’t owe

WASHINGTON — As part of Small Business Week, the Internal Revenue Service today reminds small business owners and self-employed people that they can avoid a surprise tax bill and possibly a penalty by making estimated tax payments during the year.

 

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Supreme Court hears arguments on major state trust tax case

by ROGER RUSSELL

The justices questioned a state’s ability to tax income from a trust based on the beneficiaries residing there before taking any distributions.

 

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With new SALT limit,

IRS explains tax treatment of state and local tax refunds

WASHINGTON — The Internal Revenue Service today clarified the tax treatment of state and local tax refunds arising from any year in which the new limit on the state and local tax (SALT) deduction is in effect

 

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IRS Urges: Be vigilant against phone scams
Annual "Dirty Dozen" list continues

WASHINGTON - As the April filing deadline approaches, the Internal Revenue Service today warned taxpayers to be alert to tax time phone scams where aggressive criminals pose as IRS agents in hopes of stealing money or personal information.

 

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The IRS is issuing new ACA penalties

by JOANNA H. KIM-BRUNETTI

Lost amid the confusion of the federal government shutdown this year was a new set of penalties the IRS began to issue as part of the agency’s ongoing enforcement of the Affordable Care Act.

 

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Individuals who need passports for imminent travel should contact IRS promptly to resolve tax debt

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WASHINGTON - The Internal Revenue Service today reiterated its warning that taxpayers may not be able to renew a current passport or obtain a new passport if they owe federal taxes. To avoid delays in travel plans, taxpayers need to take prompt action to resolve their tax issues.

Current Events at IRS:

Commissioner Rettig's Message for Taxpayers

Commissioner Chuck Rettig this week shared a message for taxpayers on

 

YouTube - (click here).

 

The Commissioner shared important tips for this year’s filing season, including choosing a trusted tax professional and reminding people to check their withholding.

Lawmakers ask for more relief from underwithholding penalties

Tax refunds have emerged as the latest flashpoint in Congress as lawmakers ask the IRS to give taxpayers some relief from the threat of tax penalties if they didn't withhold enough money from their paychecks last year.

 

Reports began emerging after tax season opened in late January from early filers that many of them either owed more money than they expected to the Internal Revenue Service or were receiving smaller tax refunds than last year, thanks to the Tax Cuts and Jobs Act.

 

Early statistics from the first few days of tax season released by the IRS indicated the average refund amount declined from $2,035 to $1,865, an 8.4 percent drop (see IRS reports decline in refunds and filings during first week of tax season).

 

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The PATH Act and Refund Delays

The PATH Act is federal legislation that prohibits the IRS from releasing certain Tax Refunds before February 15th..

 

...for tax returns which include the Earned Income Tax Credit (EITC) and/or Additional Child Tax Credit (ACTC).

 

This means that impacted customers will experience a delay in receiving their refund, particularly when filing early in the tax season.

2018 Tax Update Information

Tax Cuts and Jobs Act (TCJA)

Miscellaneous Deductions

Under the Tax Cuts and Jobs Act miscellaneous deductions which exceed 2% of the taxpayer’s adjusted gross income (AGI) will be eliminated.

 

This provision includes deductions for unreimbursed employee expenses and tax preparation expenses. Additionally, this provision includes expenses that the taxpayer incurs in his or her job that are not reimbursed, such as; tools and supplies, required uniforms not suitable for ordinary wear, dues and subscriptions, and job search expenses. These expenses also include unreimbursed travel and mileage, as well as the home office deduction.

 

The elimination of unreimbursed employee expenses only affects taxpayers who claim an employee-related deduction on Schedule A.

 

If, as a business owner, the taxpayer typically files a Schedule C, his or her
business-related deductions are not affected by the elimination of Schedule A deductions.

Tax Credits vs Tax Deductions

Tax credits do not have the same effect as deductions.

Deductions such as IRA deductions and excess itemized deductions reduce the income amount on which the tax is levied. Credits, on the other hand, are subtracted directly from the gross tax liability.

 

If a taxpayer, for example, is in the 15% bracket on the applicable tax table, a $100 deduction reduces their tax liability by only $15.

 

If, on the other hand, he or she has a tax credit of $100, this will reduce their tax liability by a full $100.

 

See Publication 17 - Part Six - Figuring Your Taxes and Credits for complete
details.

Current Events in Taxes ...

IRS Collection Enforcement activities

Recently, joint research from the Internal Revenue Service and the Urban-Brookings Institute highlighted the results of many IRS enforcement activities, including the impact of past years’ changes to IRS Collection policy. It is no secret that the IRS has been kinder and gentler to tax debtors during the past five years.

 

The 2012 Fresh Start Initiative and the relaxing of lien filings and levies during the past five years has relieved burden on taxpayers and the resource-constrained IRS. However, this more relaxed policy hasn’t resulted in maximizing collection for the U.S. Treasury. The IRS continues to tweak its collection policies and procedures to collect the most tax dollars.

 

During the past five years, new laws and IRS administrative changes to collection policy have been frequent, and can be hard for taxpayers and tax professionals to keep up with. This year has been no exception; in fact, 2017 has seen these six important changes to IRS collection policy.

Tax Debts and Passport Revocations

- How to Avoid Restrictions under S7345..

If you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that debt to the State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS.

 

The IRS began sending certifications of unpaid tax debt to the State Department in February 2018.

 

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Lawmakers demand explanation for IRS’s Tax Day computer crash

A group of lawmakers on the House Ways and Means Oversight Subcommittee..

 

.. are asking the Internal Revenue Service’s acting commissioner, David Kautter, to explain why the IRS’s systems crash occurred on Tax Day, April 17.

 

The systems crash prevented last-minute filers and their tax preparers from sending in their tax returns for much of the final day of tax season, and the IRS was forced to extend tax season by an extra day until April 18 once the systems were back up and running (see IRS systems run into trouble as tax deadline looms, agency gives taxpayers an extra day to file).

 

IRS officials have said the crash originated at a system in an IRS facility in Martinsburg, Va., and started around 1:00 to 3:00 a.m., and then fully crashed at 4:00 a.m. The IRS got the system back up and running by 5:00 p.m. when it sent an email to tax professionals. It was down for about 11 hours. The problem seems to have originated with a piece of hardware running the IRS’s master file system that stores taxpayer information. The system was running assembly language, computer code programmed for specific hardware.

 

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DMX sentenced to a year in prison for Tax Fraud

Rapper and actor DMX was sentenced to one year in prison for tax fraud..

 

.. for evading taxes from 2010 to 2016.

 

Published: March 29, 2018

 

DMX, whose real name is Earl Simmons, was accused of concealing millions of dollars in income from the Internal Revenue Service and avoided paying $1.7 million of tax liabilities.

 

He pled guilty last November, before United States District Judge Jed S. Rakoff, who imposed sentence on him Wednesday.

 

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Budget Bill Passed - Renews Tax Extenders

Feb. 9, 2018 - Today the U.S. government passed a $400 billion budget bill that retroactively renews many expired tax provisions.

 

The IRS announced this afternoon that it will be assessing the significant changes in order to determine its implementation plan.

 

We are also evaluating the legislation and will be preparing to implement the necessary changes in conjunction with the IRS. It is too early to know when these updates will be available, but rest assured, we will be working diligently to update our Clients as timely as possible.

 

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For more information

6 Myths About Tax Refunds - IRS wants you to know

It’s probably not surprising that the inner workings of the way tax returns are turned into tax refunds are opaque to most taxpayers – it’s a complicated process, after all.

 

In the absence of knowledge, however, many taxpayers substitute guesses, rumors, wishful thinking and worse, buying into a set of myths that end up having to be debunked almost every year – whether by IRS staff, or by paid tax preparers who have to explain why the taxpayer was misled by what their cousin heard from that guy at the gym.

 

Here is a set of particularly pernicious myths that the IRS has singled out to help clear the air.

 

CLICK HERE

..to continue..

 

Driver’s license or State Identification for the taxpayer

Due to IRS Security Summit initiatives designed to help prevent identity theft, each individual electronic filing requires one of the following:

  1. A valid Driver’s license or State Identification for the taxpayer (and spouse, if applicable).
  2. An indicator that the taxpayer (and spouse, if applicable) does not have a Driver’s License or State Identification
  3. An indicator that the taxpayer (and spouse, if applicable) did not provide a Driver’s License or State Identification.

 

Did Trump Cancel the Obamacare Tax Penalty?

The Trump administration has not canceled the Obamacare tax penalty and the IRS has declared that the penalty is still in force.

 

This is true despite an early 2017 decision to allow citizens to continue to file "silent returns," meaning returns that leave blank the question about whether or not you had health coverage for the tax year.

 

With the maximum penalty amount climbing sharply (see below), it's currently unwise to go without health insurance on the assumption that the penalty won't be enforced.

 

IRS Urges Taxpayers to Renew ITINs

The Internal Revenue Service says taxpayers who have not renewed their expired Individual Taxpayer Identification Number (ITIN) will face processing delays if the number is used to file a return.

 

In addition, the taxpayer could lose eligibility for key tax benefits until the ITIN is renewed.

 

Georgia Statute of Limitations on Debt Collection

Many consumers in the state of Georgia are dealing with unpaid credit card bills, medical bills, and other unpaid loans. When debts go unpaid for a long period of time, creditors may decide to institute a lawsuit against the consumer so that the creditor can obtain a judgment. A judgment provides the ability to collect money involuntarily through wage garnishments or seizures of bank accounts or other property.

 

A debtor being sued by a creditor should be informed of the statute of limitations for a breach of contract action. That's because most lawsuits for the collection of debts are considered breach of contract cases.

 

In Georgia, written contracts have a statute of limitations period of 6 years from the time in which the debt becomes due and payable and the period runs from the date of last payment (OCGA 9-3-24). On the contrary an open account, implied promise or undertaking has a statute of limitation of only 4 years (OCGA 9-3-25). Prior to entering into an agreement to pay off a debt, a consumer should ensure the debt is actually still due and payable.

 

NOTE: Payment, unaccompanied by a writing acknowledging the debt, does not toll the statute; the statutory period runs from the date of default, not the date of last payment.