Old News, Well Worth Remembering, A Tax Riddle

On May 30th, 2006, George W. Bush nominated Henry Paulson to succeed John Snow as the 74th Secretary of the Treasury for the United States.

Paulson had to step down from his position as CEO of Goldman Sachs and be confirmed by the United States Senate. Next, assuming he was confirmed, Paulson would be required by law to liquidate his entire portfolio of stocks prior to officially taking office.

For the average person, this second catch probably wouldn't be a huge deal. For Henry Paulson however, that meant he would be forced to sell off his entire 1% stake in Goldman Sachs (worth $485 million dollars)

He also would have to be willing to take a paycut from $40 million per year to around $183 thousand.

Riddle:  Why on earth would he agree to do all this?

• A.  To receive $500 million in tax free money

• B .  To possibly avoid the biggest downturn since the Great Depression

• C.  Because in 1989,  (Under Bush, Sr.) the US Government has created a special tax loophole which created a one-time loophole for a handful of high level positions that would help attract highly talented professionals away from the private sector.  And this tax loophole would eliminate a $50 million dollar tax liability for Henry Paulson.

• D.  All of the above

Scroll below to find the correct answer.



























The correct answer is D.  All of the above. Without this loophole, had Henry sold his shares at the exact same price and time, he would have been liable for more than $200 million worth of state and Federal capital gains taxes.

Obamacare Will Affect Income Taxes, Here's How

This article just in from TaxAct and was forwarded to  Tax- Professionals

***


The most significant implications of the Patient Protection and Affordable Care Act of 2010, also known as “Obamacare,” are just around the corner. In addition to having wide-ranging effects on health insurance in 2014 and 2015, the legislation also impacts income taxes.

“Though the Affordable Care Act has implications on income taxes, you can still act confidently when preparing your tax return with an online solution,” says TaxACT spokesperson Jessi Dolmage. “The question and answer interview will cover all the tax law changes.”

The health care act included several tax law changes for 2013 federal income tax returns due April 15, 2014:

• Employees will report the total amount paid by them and their employer for health insurance premiums, flexible spending beyond payroll deductions and other premiums, on their returns. “The amount is needed for health insurance changes; it doesn't impact your taxable income,” explains Dolmage. “Simply enter the amount in Box 12 with Code DD on your Form W-2 when prompted by the tax program.”

• If you itemize deductions, the threshold for deducting medical expenses increases to 10 percent of your adjusted gross income (AGI). The threshold for taxpayers age 65 and older remains at 7.5 percent. The tax software will calculate the deduction after you enter your medical expenses.

• A 3.8 percent tax on net investment income will apply to taxpayers at higher income levels based on filing status. Individuals and heads of household with an AGI of $200,000 plus, married couples filing separately with an AGI of $125,000 plus, and couples filing jointly with an AGI of $250,000 plus must pay the tax. Answer a few questions about investment income and your tax program will do the rest.

• Taxpayers in those same AGI ranges will also pay an additional 0.9 percent Medicare tax on wages and compensation in excess of $200,000. The tax is automatically withheld from employee wages, with the total amount provided in Box 6 of your Form W-2. If you’re a business owner or self-employed, the tax is calculated using figures on your Schedule SE.

The health insurance requirement doesn't have tax implications for another year. If you have health insurance, your online tax solution will guide you through the simple process of reporting it on your 2014 tax return due April 2015. If you don't have health insurance for a total of three or more months in 2014, you may pay a penalty that's reported and calculated on your tax return. Tax programs will calculate the amount based on number of uninsured individuals in your household and household income.

Uninsured individuals can shop and apply for health insurance through online “marketplaces,” also called “exchanges,” starting Oct. 1. States will have their own marketplaces, use the federal government's Health Insurance Marketplace or a hybrid of the two. Enrollment closes March 31, 2014.

If you don't have access to minimum required employer-provided insurance and purchase insurance through a marketplace, you may qualify for an advanced premium tax credit applied directly to your monthly premiums. Eligibility and amount are based on the cost of marketplace premiums and your household size and income. If you do not take advantage of the advanced premium tax credit, you can still claim the refundable credit on your 2014 tax return. Cost-sharing subsidies may also be available for other health care expenses such as deductibles, copayments and coinsurance.

IRS Appeals the RTRP Court Decision

This battle is far from over, and please keep in mind, that California is one of two or four states (depends on how you look at it) which requires tax-preparers to take test within their continuing education requirements each year.

So when a a judge says it's illegal to do that, California's CTEC comes into question.  Personally, after I passed the RTRP exam with the IRS, and moved offshore, I dropped the CTEC certification or registration, because I found it too difficult to serve two masters.

Read what's happening in court now.

***


The Internal Revenue Service is set to square off in court Tuesday against a trio of tax preparers who won a key ruling earlier this year invalidating the IRS’s efforts to impose mandatory testing and continuing education of Registered Tax Return Preparers.

 

Three preparers—Sabina Loving of Chicago, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wis.—won a victory against the IRS in January when U.S. District Court Judge James E. Boasberg ruled in their favor and found the IRS had exceeded its statutory authority in imposing its Registered Tax Return Preparer requirements (see Court Rules IRS Doesn’t Have the Authority to Regulate Tax Preparers).

The IRS appealed the decision in the case, known as Loving v. IRS, and Judge Boasberg clarified the ruling in February, enabling the IRS to re-open its Preparer Tax Identification Number, or PTIN, online registration system for tax preparers. The judge also clarified that tax preparers could take competency tests and continuing education courses on a voluntary basis, but they would not be required to do so while his injunction remained in place (see Court Modifies Ruling Invalidating Tax Preparer Regulations). An appeals court in the District of Columbia later rejected the IRS’s request to lift the injunction, pending its appeal of the judge's decision (see Appeals Court Refuses to Lift Injunction against IRS Tax Preparer Regulation).

The same appeals court, the U.S. Court of Appeals for the D.C. Circuit, has scheduled oral arguments in the case for Tuesday. Up to now, the case has largely been argued and appealed in the form of legal briefs from the plaintiffs’ and defendants’ legal counsel, along with amicus briefs from supporters on either side, but the oral arguments will give the two sides a chance to air their views in court and take questions from the three judges on the panel.

Dan Alban, the lead attorney on the case at the Institute for Justice, a libertarian law firm in Arlington, Va., which successfully represented the three tax preparers in their lawsuit against the IRS, has been focusing intently on preparing for the hearing. “We’re going to continue making the same argument we’ve made since we filed the case, that Congress never gave the IRS the authority to license tax preparers and the IRS simply can’t give itself that power,” he said in an interview Monday. “The district court agreed with us, found that the IRS did not have any statutory authority to pass these RTRP regulations, and we hope the court of appeals will agree.”

As for the IRS, Alban assumes its attorneys will make arguments similar to the kind in the briefs that they have already filed, essentially arguing that the IRS does possess the legal authority to impose the RTRP requirements. “They’ll go first because they are the ones appealing the decision,” said Alban. “We’ll go second and then they’ll have a short opportunity for rebuttal, usually just a few minutes. There’s 15 minutes per side.”

Besides giving the two sides the opportunity to air their legal arguments in open court, the hearing will also give the judges on the three-judge panel an opportunity to ask questions of the attorneys on both sides. “Typically oral argument consists more of a Q&A type format rather than a prepared speech,” Alban explained. “The content of what is discussed will be dependent on what questions the judges ask.”

In March, the Senate Finance Committee offered a proposal, among the many tax reform options it is considering along with the House Ways and Means Committee, to re-impose the tax preparer regulation regime through legislation (see Senators Lay out Tax Reform Options and Consider Re-imposing Tax Preparer Regulation). One of the tax reform option papers proposes to “ensure that the IRS has authority to oversee paid preparers by providing clear statutory authority for the IRS to regulate tax return preparers if the IRS loses its appeal in the Loving case.”

So far, no federal legislation has been passed, but some states may decide to license and regulate tax preparers on their own, as California and Oregon have for years. The New York State Division of Taxation and Finance proposed last month to add to its existing registration requirements for tax preparers by also requiring continuing professional education and a competency examination for registered preparers. Under the proposal, tax preparers in New York State would be denied a license if they have not satisfied the CPE and competency exam requirements, or if they have violated any tax laws, been the subject of any adverse disciplinary actions relating to their tax preparation conduct, engaged in fraud or deceit related to their tax preparation activities, failed to truthfully complete the registration application or pay their registration fee, lacked a high school diploma or its equivalent, and failed to satisfy the applicable IRS requirements for tax return preparers.

Alban does not anticipate that many states will impose their own tax preparer regulations. “There are only a handful of states—depending on how you count them, either two or four states that do that sort of thing—and they have had mixed results,” he pointed out. “California is one of the states with, I think, the longest licensing scheme, and they’ve also had among the highest error rates on returns prepared by preparers. I don’t think that’s an encouraging sign to a lot of states, and I don’t necessarily think they’re going to follow suit.”

Tax Credits and the New Health Care Bill

The health care exchanges are being rolled out on October 1^st and 50 million people will be encouraged to go to the exchanges to obtain coverage. Upon the roll out of the exchanges there are 5 developments that you need to consider:

• What is an exchange? Where do you purchase coverage?

An exchange is an online marketplace where individual and small group consumers will be able to go online to shop for and purchase health insurance plans. Individuals and small business owners can access the exchanges through navigators, government websites, or independent brokers. Many brokers, like Newtek Insurance Agency, are appointed on the exchange and with private markets. This will help line up the coverage options and differences between the exchanges options, and what is available in the private market.

• How do the subsidies work?

If you do not meet certain income requirements then the federal government will give you a tax break / subsidy to purchase health insurance. As a consumer, you can choose one of two ways to accept your tax credits:

• You can accept an estimated credit that will lower your health insurance premiums by a set amount each month. The actual amount of the credit will be settled out when the individual’s taxes are filed.
• You can pay the monthly premium in full, and then deduct the amount of the coverage from your yearend tax return.

• What will the coverage look like?

The plans available on the exchange will have metallic coverage levels consisting of catastrophic, bronze, silver, gold, and platinum. Please see our next blog post “Understanding Exchange Plan Options” to be posted tomorrow.

• What is not included?

Ancillary lines of coverages are not included. Many people are used to having the option to buy dental, vision, life and disability coverages with their health insurance. These coverages will not be available through the exchange.

• Is there a benefit to the exchange plan?

If you are unable to afford coverage in the private market then the exchange options are a great value. They will provide individuals, the opportunity to purchase some form of health insurance coverage, whom would otherwise not be able to due to cost.

Thank you to Forbes.

Four Major Steps in Building Wealth From the Ground Up

Tips on how taxpayers build wealth from the ground up.  Read more

FREE Tools to Determine the Business Structure of Your New Business

A message from the CEO of CorpNet talks about the company helping small business owners to start their business, using the best business structure, with the least amount of taxes.

-----

CorpNet Rolls Out Complimentary Business Consultations for small business
owners and entrepreneurs interested in starting a business!

Our new service is designed to help guide small business owners through some of
the common questions associated with starting and running a business.

We are offering a no-cost complimentary phone business consultations to help
answer common questions that entrepreneurs and small business owners have
related to starting and running their business.

Web visitors can simply click on “Free Business Consultation” from CorpNet.com’s
home page to request their personal phone consultation with one of CorpNet’s
tenured business start up specialists.

“This year, our goal has been to provide our small business clients with a
wealth of free resources to help them incorporate online and build a successful
business. While we offer how-to videos, free guides, and helpful articles on our
website, we know that sometimes you just want to talk one-on-one with an expert.
And that’s exactly what you can schedule with a free business consultation,”
said Nellie Akalp, CorpNet's co-founder and CEO. 

Common questions that the phone consultations can help with include: How can I
open a corporate bank account? How long before my business in incorporated? Can
I be incorporated as of today? When is my annual report due? How can I operate
under different business names?

The business consultations are part of CorpNet’s overall strategy to develop
free, value-add tools for its clients and the small business community. Other
tools available at CorpNet include a Business Structure Wizard, B.I.Z. (a
free corporate compliance concierge tool), free meeting minute templates, and
numerous free guides on starting and growing a business.

CorpNet has helped more than 10,000 businesses form since 2009, helping
small businesses across the country form an LLC or Corporation, file a DBA, keep
their business compliant, and more. The company has made a name for itself for
its personal touch, fast and reliable services, and flexible packages that meet
the needs and budget of any entrepreneur and business.

Nellie Akalp, Chairman, President & CEO
CorpNet Incorporation Services

Newest U.S. Airforce Toy, Your Tax Dollars at Work

Click on the image to find out more about the U.S. Airforce Newest Toy.  Your tax dollars at work.

Report Your Income Even If You Earned It Illegally

Unreported income, which is supposed to be reported, based on the tax laws makes the taxpayer an illegal person of interest.  I can’t emphasize enough to clients or my readers, the importance of reporting your income.

Even if it feels ok, at the time of the un-wise decision to hide the income, I can guarantee you that there will come a time, when the truth will come back and haunt you.  It may take 18 months, or it may take 3 to six years.

The very second that you spend the monies which weren’t reported to the Department of the Treasury, you are walking on thin ice.  You are spending money which has no bases, or no foundation.  This leaves mental and spiritual gaps in your financial world.

Do yourself a favor and report that which you earn.  Even if you earn the income illegally, if you report the income, you won’t have problems with the IRS.  One important tip, when the Form 1040 ask for your occupation, just say consultant.

From me, to you, to my clients past, present and future and all my readers, report the stupid income.  The IRS has ways of finding out.  In my Book Website Success and the IRS, I discuss some of the ways the IRS finds out about un-reported income.  You can purchase the Book on Amazon, in the Kindle Store. 

You don't need an e-Reader, you can download Amazon's free app and read on your desktop or laptop.  Website Success and the IRS  (They got Al Capone on tax evasion, nothing more)

What to do if your received one of IRS erroneous penalty notices

The IRS sent out approximately 4,000 erroneous notices to plan sponsors informing them that they filed either a late or incomplete Form 8955-SSA. It appears that a programming error triggered the notices. An IRS representative stated that the IRS will send a letter in approximately two weeks to the affected plan sponsors, notifying them of the error and relaying that no additional action is required from the plan sponsor.

Plan sponsors may also contact the IRS helpline prior to receiving the letter at 877-829-5500. According to the IRS representative, the penalty will be abated during the phone call, and a confirmation letter will be sent in the mail.

Iran Owns a Manhattan Skyscraper? Feds Set to Seiz Building

The United States is set to seize control of a midtown Manhattan skyscraper prosecutors claim is secretly owned by Iran, the justice department said, though the ruling is to be appealed.

The seizure and sale of the 36-story building, in the heart of New York City on Fifth Avenue, would be "the largest-ever terrorism-related forfeiture," the statement added.

A federal judge ruled in favor of the government's suit this week, saying the building's owners had violated Iran sanctions and money laundering laws.
Manhattan Federal Prosecutor Preet Bharara said the decision upholds the justice department claims the owner of the building "was (and is) a front for Bank Melli, and thus a front for the Government of Iran."

Bharara said the funds from selling the building would provide "a means of compensating victims of Iranian-sponsored terrorism."

Prosecutors allege the building's owners, the Alavi Foundation and Assa Corporation, transferred rental income and other funds to Iran's state-owned Bank Melli.

Alavi also ran a charitable organization for Iran and managed the building for the Iranian government, the statement said.

Built in the 1970s by a non-profit operated by the Shah of Iran -- and financed with a Bank Melli loan -- the building was expropriated by the new Iranian government after the 1979 revolution, prosecutors allege.

They said the Shah's non-profit, the Pahlavi Foundation, was renamed the Mostazafan Foundation of New York and then the Alavi Foundation.

A former president of the Alavi foundation pleaded guilty in 2009 to obstructing justice in destroying evidence related to the case, which was first filed in 2008.

The Alavi foundation plans to appeal, saying on its website it was "disappointed" with the ruling and that "it did not have the opportunity to rebut the Government evidence before a jury."

The US Treasury Department has instituted tight sanctions against Iran, blacklisting a number of Iranian companies and organizations and putting controls on the ability of any group or business to transfer funds into Iran.

The restrictions seek to pressure Tehran into giving up what the West says is a program to develop nuclear weapons.

Copyright (2013) AFP. All rights reserved

Swiss Bank Pleads Guilty to Helping Americans Hide $1.2 billion form the IRS?

The man behind Beanie Babies, the toy animals that saw their heyday in the mid-90s, has agreed to plead guilty to tax evasion for failing to report income held in Swiss bank accounts.

H. Ty Warner, 69, has been charged in U.S. District Court with felony tax evasion. The indictment alleges that in 1996, Warner traveled to Zurich to open an account with Union Bank of Switzerland (UBS) with the intent to "evade and defeat" taxes on $3.1 million in foreign income.
It details accusations that Warner shuffled the money between banks and failed to report or otherwise misreported his income.

"Regardless of wealth, everyone must pay taxes on all of their income, not just the amount they choose to report," said Gary S. Shapiro, United States Attorney for the Northern District of Illinois. "The charge alleges that Warner went to great lengths to hide from his accountants and the IRS more than $3.1 million in foreign income generated in a secret Swiss account. Such conduct invites federal prosecution."

According to a statement from prosecutors:

"In 2002, Warner earned approximately $3,161,788 in gross income through investments held in his UBS account, according to the charge. Warner allegedly committed tax evasion for that year by failing to tell his accountants about that income and by failing to report that income or the existence of the UBS account in his 2002 form 1040 filed with the IRS in October 2003, as well as failing to report that same income on an amended 2002 form 1040 filed in November 2007."

The statement said that Warner, through his attorney, had "authorized the government to disclose that he is cooperating with the Internal Revenue Service and will plead guilty to the charge."

1. As we reported earlier this year, the U.S. is in the process of cracking down on offshore tax havens. In January, Switzerland's oldest bank, Weglin & Co. pleaded guilty in New York to helping Americans hide $1.2 billion from the IRS and in 2009, UBS paid $780 million in a similar settlement that forced it to identify its U.S. account holders.

For Tax Professionals, Seven Myths About ObamaCare

By:  Chauncey Hutter, Jr

Myth #1ObamaCare (The Affordable Care Act) will be repealed or ACA will not go into effect … so as a tax professional I don’t need to worry about it

Myth #2
The one year delay in the ACA Employer Mandate pushes back my need as a tax biz owner to get up-to-speed on ObamaCare

Myth #3
ObamaCare Does NOT Affect My Client Base [See Scenario A, B or C]

· Scenario A [I only have lower income clientele]

· Scenario B [My clients are mostly middle income]

· Scenario C [Higher income clients make up my tax practice]

Myth #4
Since the main tax forms related to ObamaCare don’t go into effect until Tax Year 2014 (or Jan ’15), I can delay my education for a while

Myth #5
I realize there is Significant Confusion on the topic of ObamaCare heading into open enrollment on October 1st, but taxpayers will be contacting other people for answers, not me

Myth #6
I understand the ObamaCare qualifications are very complicated and the potential for fraud with this new program are much higher than normal, but I’m just the tax preparer – I won’t be held accountable for this tax season’s returns [beginning Jan ‘14]

Myth #7
Just because H & R Block recently announced they are getting into the insurance business next month isn’t a sign Healthcare is going to impact my tax business as early as this Fall

Listen to Webnair, learn more. 

Investment Opportunity Alert, Is Twitter Going Public?

Twitter said Thursday that it filed for an initial public offering, setting the stage for the most high-profile technology stock market debut since Facebook's troubled share sale last year.
Twitter announced the filing on its own social media messaging service, saying: "We've confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale."

First Take: Is the tech hype back with Twitter's IPO?

The company followed that up with a second tweet, saying "back to work" and attached a photo of employees at Twitter headquarters in San Francisco  read more

Tax Revenues Increased, Lowers Gov Budget Deficit by $400 Billion

The Congressional Budget Office is seeing a $400 billion reduction in the federal government’s budget deficit for the current fiscal year, thanks to increased tax revenues due largely to the expiration of the payroll tax cut.

 

The federal government ran a budget deficit of roughly $750 billion for the first 11 months of fiscal year 2013, CBO estimates—a reduction of more than $400 billion from the shortfall recorded for the same period last year, according to a report released Tuesday by the CBO. “Revenues have risen significantly, accounting for more than two-thirds of the decline in the deficit,” said the report.

Tax revenues for the first 11 months of fiscal year 2013, from October 2012 through August 2013 rose 13 percent compared with tax collections during the same period in fiscal 2012. Tax receipts for those first 11 months totaled an estimated $2.47 triillion, $284 billion more than receipts for the same period last year.

Individual income taxes and payroll taxes together increased $251 billion, or approximately 14 percent, according to the CBO. Taxes withheld from workers’ paychecks rose by $160 billion (or 10 percent), mainly because of the expiration of the payroll tax cut in January 2013, along with higher wages and salaries, and increases that began in January in the tax rates for income above certain thresholds as a result of the fiscal cliff deal.

Nonwithheld taxes rose by $91 billion, or approximately 27 percent, according to the CBO. About three-fourths of that increase occurred during the tax-filing season from February through April, mainly because final payments for the 2012 tax year were much larger than their counterparts last year.

Some of the growth in nonwithheld receipts also reflected an increase in estimated payments for the current tax year (made in the spring and the summer) and some payments made at other times for the 2012 tax year, such as the quarterly payments made in January 2013.

The large percentage increase of 53 percent in other receipts of individual income and payroll taxes, which the CBO refers to as "social insurance taxes" and which are net of refunds, occurred because last year’s refunds offset much more of the payments than this year’s tax refunds have.

In addition, net corporate income taxes were higher by $30 billion (or 16 percent), probably because of growth in taxable profits in calendar year 2012 and the first half of calendar year 2013, the CBO pointed out.

The CBO is expecting the federal government to see further tax revenue increases later this month, as the next quarterly estimated payments by individuals and most corporations are due in mid-September.

IRS to Increase Audits of Prior Year Tax Returns!

The bottom line:  In 2012 the IRS did 1.1 million correspondence audits and applied an additional $9.2 billion in tax liabilities.  People, this will increase.  Read the report that came out this week.
NOTE:  When a majority of taxpayers are striving to do their own taxes, they have very little support when the IRS sends an CP-2000 (paper audit)  And according to the report, these paper audits will increase.

***


The Internal Revenue Service needs to strengthen its correspondence audit selection process by auditing more of the prior- and subsequent-year tax returns of noncompliant income tax filers, according to a new government report.

 

The report, by the Treasury Inspector General for Tax Administration, noted that the IRS relies heavily on the correspondence audit process to examine individuals who are suspected of underreporting their tax liabilities.

The correspondence audits often result in significant additional tax assessments, and the IRS has found audits conducted by correspondence to be more economical than other types of audits, such as face-to-face audits in IRS offices or out in the field meeting with taxpayers. Statistics indicate that in fiscal year 2012, the IRS conducted 1.1 million correspondence audits and recommended approximately $9.2 billion in additional taxes.

For its report, TIGTA set out to determine the effectiveness of the filing checks made during the correspondence audit process in the IRS’s Small Business/Self-Employed Division. Filing checks are used, in part, by the SB/SE Division to determine whether the same pattern of noncompliance identified on an audited tax return is present on the prior- and subsequent-year tax returns, and if those tax returns also warrant an audit. When they are properly completed, filing checks enable the IRS to better leverage its auditing resources by increasing the overall compliance coverage of every audit.

TIGTA evaluated a statistical sample of 102 out of 7,470 single-year correspondence audits in which the taxpayers involved agreed that they understated their tax liabilities by at least $4,000. Similar tax issues also existed on the prior- and/or subsequent-year tax returns for 43 of the 102 taxpayers. TIGTA found that 32 of the 43 individuals did not have those tax returns audited and, as a result, may have avoided additional assessments ranging from $2,343 to $18,874.

TIGTA pointed out in its report that one factor that may have contributed to the limited number of prior- and/or subsequent-year tax audits in the sample it examined is the emphasis the IRS places on keeping its audit inventories free of older tax years so there is enough time to complete audits and assess any resulting taxes within the three-year statute of limitations for assessments. There are also some control issues involving how current-year audit results are used to decide whether to audit any prior- and subsequent-year tax returns.

TIGTA recommended that the IRS develop and implement procedures that instruct its auditors how they should use current-year correspondence audit results when deciding whether the prior- or subsequent-year tax returns also warrant an audit. To ensure that the instructions are followed, TIGTA also recommended that the procedures should include instructions for monitoring how well current-year correspondence audit results are used in deciding to audit prior- and/or subsequent-year tax returns.

The IRS agreed with TIGTA’s recommendation and plans to develop an Internal Revenue Manual section to address the case selection and delivery process, in addition to the duties and roles of IRS analysts and examiners.

“We agree that, in certain circumstances, it makes sense to audit the prior- and/or subsequent-year return; however, we need to consider various factors when making that determination,” wrote Ruth Perez of the IRS’s Small Business/Self-Employed Division, in response to the report. “For instance, when deciding whether to select a prior-year return, both the burden on the taxpayer and the administrative responsibilities of the IRS must be considered when there is limited time remaining on the statute of limitations. In addition, to best use our limited resources, we select the next best case for examination which may not be the prior or subsequent year of the taxpayer under examination. We will create procedures for selecting prior-year returns taking these items into consideration.”

The SB/SEC Division has already developed and implemented procedures for addressing all subsequent-return filings on the agreed and default discretionary workloads that are delivered by the IRS’s Campus Reporting Compliance unit, she pointed out.

“We will ensure those procedures are properly documented and monitored,” Perez added. “We agree that there may be some measurable benefit derived from your recommendations. However, we believe the outcome measure, as calculated, does not take into account the impact of our model of working the next best case or our procedures to ensure we only work cases with sufficient time on the statute of limitations for assessment.”

Interest Rates Remain the Same, Fourth Quarter of 2013

Interest Rates Remain the Same for the Fourth Quarter of 2013

IR-2013-74, Sept. 5, 2013

WASHINGTON — The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Oct. 1, 2013. The rates will be:

• three (3) percent for overpayments [two (2) percent in the case of a corporation];
• three (3) percent for underpayments;
• five (5) percent for large corporate underpayments; and
• one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate determined during July 2013 to take effect Aug. 1, 2013, based on daily compounding.
Revenue Ruling 2013-16 was also released today and will appear in the Internal Revenue Bulletin 2013-40 dated Sept. 30, 2013.

Taxpayer's Allocation of IRS Tax Refunds

Proper Allocation of Taxpayers' Refunds
 
Taxpayers may direct their refunds to more than one account at a bank or other financial institution in the United States using Form 8888, Allocation of Refund; however, they may not request deposit of their refunds to accounts that are not in their names, such as their tax preparers' accounts.

And per regulations in Circular No. 230, a practitioner who prepares tax returns may not endorse or otherwise negotiate any check issued to a client by the government in respect of a federal tax liability. For questions and answers on splitting federal income tax refunds, visit Frequently Asked Questions on IRS.gov.

Need Extra Money for Travel? Payday Loans for Budget Travelers

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Inside Tips on Launching a Product Online, How the Big Boys Do It

OK people; woke up late this morning and what I found on the Internet amazed me even further.  An online campaign for the what?  "The Smart Watch"  Below is just one of the ads you will be seeing all over the Internet.  But the real kicker is that at around  9:45 AM CST; the item was number 4 on Google's news.google.com page.  So take notes when launching a new item, it helps to get it in the news, first thing in the morning.  This watch starts at $299 (T-Mobile)  continue below more important information.  (Will be for sale in October 2013 in the United States)





As you click around to find out the real magnitude of this online campaign you find that other manufacturers are taking advantage of the words:  smartwatch.  The watch below starts at $3999 and is way more expensive than the T-Mobile watch which makes telephone calls, takes pictures and facilitates apps!  Now its no accident that the banner ad below is located on the SAME Page as the above article!  For those of you who will be launching a new product online, take note.  The really expensive "i'm Watch" is piggy-backing off of the less expensive T-Mobile watch.




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Need to File Back Taxes, Not Sure What to Do?

The good news is:  If you haven''t filed for several years and the IRS hasn't contacted you or made any effort to have you file a tax return, then the changes are good, that "they"(the IRS owes you!

The not so good news is:  The IRS will only send you so many notices concerning your unfiled tax returns before they will contact your Employer and legally garnish your wages.

The additional collection tactic that the IRS uses, often is to levy your bank account when you owe taxes and have not made arrangements for a payment plan or requested an Installment Agreement.

This additional collection tactic is very much legal and often times, causes a major surprise for taxpayers who go to use their bank cards only to find out that the IRS has levied their "They" (the IRS) have been known to take money out of the savings and the checking account(s)

To avoid these unpleasant surprises you may want to make a sincere effort to file your unfiled tax returns(s) as quickly as possible.

In many cases people have lost their W2(s) and other tax information needed to prepare their returns.  Not a problem.  There are services online who will help you obtain this information directly from the IRS.  Or, you can call the IRS and have the information mailed directly to your home, or faxed to you.

It's not advisable to try and complete unfiled tax returns without the correct and exact information.  If you file the return with missing or incorrect information, the return will be tagged and stands a higher chance of being audited.

When you contact the IRS by calling 1 800 829-1040.  Be prepared to wait for 15 to 60 minutes before you can talk to a representative.  Be patient, listen carefully to what the representative says and confirm the date that your taxes will need to be filed by.  Obtain the correct address to mail the return.  In some cases you may be transferred to collections.  Don't let this frighten you, and if it does, politely hang up the phone and contact an experienced tax professional to handle the situation.

Did You Receive a CP63 Notice From the IRS?

CP63 – Notice from the IRS informing you they are holding your refund until they receive one or more unfiled tax returns.

Were you expecting a big refund and instead of a refund in your checking account you received a CP63?  You're not alone.  This is one of the IRS's favorite tactics to get taxpayers to file past due tax returns.

Not to worry, as soon as you file the unfiled tax return(s) and the IRS post the information, you will receive your refund, IF you don't owe the IRS any money!

The best thing to do is to file your unfiled taxes right away and start the process so you can get your refund as quickly as possible.  If you have loss your W2 and other information necessary to file the unfiled taxes, call the IRS at 1 800 829-1040 (Be prepared to spend up to an hour on the phone)  The IRS will mail or fax the tax information you need to file a true and correct tax return.