one for the informed and one for the uninformed."
--Judge Learned Hand
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"There are two systems of taxation in our country: one for the informed and one for the uninformed." --Judge Learned Hand
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| Schedule L starting in 2009 | Aug 2009 | |||||
| New schedule L will be required to claim special add-ons to the standard deduction in 2009. IRS wants details. Taxpayers who add real estate taxes, sales tax on vehicles or disaster losses to their standard deduction must file new Schedule L and list the extra amounts. | ||||||
| Real Estate Transfers | Aug 2009 | |||||
| IRS watching real estate transfers [e-News for Tax Professionals, Issue No. 2009-31]: IRS's Estate and Gift Tax Program is now working with state and county authorities in several states to determine if real estate transfers reported to them are unreported gifts. "Although a tax may not be due, a gift tax return may be required for real estate transfers above the annual exclusion amount,” IRS said, adding that penalties are possible on all delinquent taxable gift returns filed. For information about estate and gift taxes go to http://www.irs.gov/businesses/small/article/0,,id=98968,00.html . | ||||||
| IRS to Conduct Corporate Matching Pilot | June 2009 | |||||
| The IRS will conduct a pilot program designed to match income from information returns to what is reported on the corporation’s tax return. Later this summer, the IRS will issue approximately 500 CP2030 notices to Form 1120 taxpayers that will notify them that the information the IRS has does not match what was reported to the IRS. | ||||||
| New Schedule M for Calculating Making Work Pay Credit | June 2009 | |||||
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The IRS has developed a draft of the new Schedule M, Making Work Pay and Government Retiree Credits,
that is to be filed with the 2009 Form 1040, 1040A, or 1040NR. The form is used to calculate the Making Work Pay
and Government Retiree Credits.
Taxpayers with multiple jobs and married couples with both working need to review their tax withholding to prevent an unexpected tax liability for 2009. The payroll tax tables don’t know if you have multiple jobs, if your spouse works or your combined income. |
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| More Enforcement at IRS | May 2009 | |||||
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The Obama administration May 7, 2009, unveiled a budget that would provide the Internal Revenue Service
$12.126 billion in fiscal year 2010, including a hefty $4.904 billion for tax enforcement. According to budget
documents, that enforcement figure includes a request for $890 million for “enhanced tax enforcement activities.”
It is unclear whether this is a new audit technique.
The budget figure provides merely the latest indication that the Administration is serious about enforcing existing laws and closing the tax gap, both domestically and internationally. This is seen as being much more doable politically than raising taxes. |
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| IRS announces 2009 addresses for payments from Texas taxpayers | Dec 2008 | |||||||||||
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The IRS lockbox payment addresses are changing for Texas individual taxpayers on January 1, 2009. Treasury’s Financial
Management Service (FMS) and the Internal Revenue Service will discontinue operations at the Dallas, Texas lockbox
facility. Payments for individual taxpayers that were previously sent to Dallas, Texas, should now be mailed to the lockbox site in Charlotte, North Carolina as shown below:
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| IRS announces 2009 standard mileage rates | Nov 2008 | |||||
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Beginning Jan. 1, 2009, the standard mileage rates for cars (also vans, pickups or panel trucks) will be:
55 cents per mile for business 24 cents per mile for medical or moving purposes 14 cents per mile in service of charitable organizations |
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| IRS allowing only last 4 digits of SS Number | Nov 2008 | |||||
| The IRS will take another step toward thwarting identity theft in 2009 by allowing all but the last four digits of taxpayer ID numbers to be masked on W-2s, 1099s, and other information returns. The IRS already blocks out portions of Social Security numbers on documents that publicly record or release tax liens. | ||||||
| NonFilers owe more than $30 Billion | Nov 2008 | |||||
| IRS can’t tell whether it is making progress with nonfilers, according to Treasury inspectors. People who don’t file are a key tax gap component, costing the government more than $30 billion a year. IRS has no performance measures to monitor nonfilers’ future compliance. So within a year, IRS vows it will have a system to track whether the people it flagged are complying. | ||||||
| 2009 Inflation Adjusted Items | Sep 2008 | |||||
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The recent spurt in inflation is actually good news for taxpayers next year. Several tax breaks will be much higher in 2009 because they are indexed to inflation, which has increased a whopping 5.4% over the previous 12 months.
The annual gift tax exemption will rise to $13,000 per recipient in 2009, a $1000 increase. That amount doubles to $26,000 if the spouse joins in the gift. The personal exemption will increase to $3650 in 2009, up from $3500 in 2008. And standard deductions will be much larger in 2009. MFJ $11,400, $500 increase. Singles $5700, $250 higher. Household Heads $8350, $350 increase. 65 and up will get an extra $1100 for Married, and $1400 for Singles and Household Heads. |
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| Children and Roth IRAs | June, 2008 | |||||
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If your child or grandchild will be toiling at a summer job, making a Roth IRA payin for him or her this year is a great idea. The limit is $5,000, but not more than the child's earnings. That sum counts toward the $12,000 annual gift exclusion ($24,000 for couples) in 2008.
The Roth can grow into a tidy sum for the child. A 16-year-old with $5,000 in a Roth IRA that earns 7% each year will have $137,000 at age 65 and $193,000 at age 70. If the child works for a few summers and annual contributions are made, future totals will be much larger. Roths are tax favored, too. All payouts after 59½ are tax free. And since payins, but not earnings, can be taken free of tax at any time, the child can pull them out in the future to help purchase a first home. |
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| Seniors with regular IRAs | June, 2008 | |||||
| The IRS believes many folks age 70½ and over don't take required minimum payouts. It plans to scrutinize Forms 5498 filed by IRA trustees to spot scofflaws. IRS will notify delinquents, telling them to take catchup distributions. | ||||||
| IRS is going after firms that misclassify workers | Feb, 2008 | |||||
| The IRS is unveiling an electronic matching system to identify firms issuing 1099s with payments of at least $25,000 to five or more workers who don't have any other sources of earned income. The Service suspects the contractors may be employees for tax purposes. Businesses meeting these criteria should expect employment tax audits in 2008. | ||||||
| IRS Free File Program is Faulty | June, 2007 | |||||
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The Treasury Inspector General for Tax Administration (TIGTA) tested the software of participating Free File
Alliance providers and discovered that some software did not always calculate tax amounts accurately.
The software is a partnership between 19 software companies and the IRS. It is available for free to taxpayers with AGIs of $52,000 or less, but only 3% of all taxpayers used it in 2006. The report highlighted a number of problems including that one quarter of the software programs did not allow taxpayer to take either the EITC or the child and dependent care credit without taking the dependency exemption. There were not sufficient interview questions to help the taxpayer determine eligibility for the dependency exemption in 45% of the software. The report encourages the IRS to establish a program to determine the accuracy of the tax software before next filing season. However, the IRS has rejected the recommendation that they provide tax law accuracy testing of the software, stating that "testing of commercial tax preparation software to determine its accuracy in applying the tax law would be a monumental challenge". |
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| IRS 2006 Data Book | March 16, 2007 | |||||
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The Internal Revenue Service announced today that its 2006 Data Book is available on the IRS Web site at IRS.gov.
The report describes activities conducted by the IRS from October 1, 2005, through September 30, 2006, and includes
information about returns filed and taxes collected, enforcement, taxpayer assistance and the IRS budget and workforce.
During Fiscal Year (FY) 2006, the IRS collected more than $2.2 trillion in tax and processed over 228 million returns. Over 80 million returns, including 54.3 percent of individual income tax returns, were filed electronically in FY 2006. Over 108 million individual income tax return filers received tax refunds totaling $243 billion. In FY 2006, IRS spent an average of 42 cents to collect each $100 of tax revenue. IRS examined nearly 1.3 million individual income tax returns in FY 2006, more than double the number examined in FY 2000. Examinations of business tax returns grew for the second year in a row, reaching over 52,000 in 2006. IRS personnel answered over 32.6 million toll-free calls from taxpayers, and the IRS Web site received about 194 million visits. |
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| IRS Launches On-Line Workshop for Exempt Organizations | ||||||
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The IRS launched a new Web-based version of its popular Exempt Organizations Workshop covering tax compliance
issues confronted by small and mid-sized tax exempt organizations.
The free online workshop–Stay Exempt–Tax Basics for 501(c)(3)s–consists of five interactive modules on tax compliance topics for exempt organizations: * Tax-Exempt Status – How can you keep your 501(c)(3) exempt? * Unrelated Business Income – Does your organization generate taxable income? * Employment Issues – How should you treat your workers for tax purposes? * Form 990 – Would you like to file an error-free return? * Required Disclosures – To whom do you have to show your records? Users can access this new training program at www.stayexempt.org. Users can complete the modules in any order and repeat them as many times as they like. The online training website does not require registration and its visitors will remain anonymous. |
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| Installment Agreement Fees Increase | ||||||
| The IRS issued final regulations increasing the user fees for submitting an installment agreement. The fees increase from $43 to $105 on January 1, 2007. The user fee for low-income taxpayers and taxpayers who pay through a direct debit program remains at $43. The user fee for restructuring an installment agreement increases from $24 to $43. | ||||||
| When Rental Income is Not Rental Income | May 2006 | |||||
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Here is one from the “boy that’s a bummer” file. Have you seen the reality show Extreme Makeover Home Edition?
If not, it is a show that builds a new home for a deserving family. What a great idea, a free new home.
Not exactly. In this particular case, the show’s producers paid rent in the amount of $50,000 to the family
for the use of their home. Section 280A(g) provides, in part, that rental income from a residence that is
rented for less than 15 days during the year is excluded from the taxpayer's gross income. Based on that,
it would appear the homeowners received $50,000 in tax-free income. Not so.
The IRS, in an information letter, pointed out that Section 74(a) states that gross income includes amounts received as prizes and awards, and that under Reg. 1.74-1(a), taxable prizes and awards specifically include amounts received from radio and television giveaway shows. So there you have it, rental income is not always rental income. In this particular case, it was a taxable prize. |
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| Treasury inspectors have uncovered massive noncompliance with S Corps | ||||||
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36,000 one-owner S corporations with profits of $100,000 or more paid NO payroll taxes on the profits because no salary was taken. Ditto for 40,000 S corporations with profits in the $50,000-$100,000 range. This costs the government about $15 billion a year in payroll tax revenue. Although the IRS now has a special audit project for cases where S owners take unreasonably low pay, it lacks the staff to audit all these firms.
Treasury is recommending that Congress close the loophole. It wants to subject to employment taxes all ordinary operating gains of S corporations that accrue to more-than-50% owners and their relatives. With all the talk about Social Security's solvency, any plan to raise the system's revenues will get serious consideration by Congress. |
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| Tax Preparation Qualifications | ||||||
| IRS-licensed enrolled agents and certified public accountants must pass training and certification requirements. But the unenrolled preparer doesn’t have to have any training to set up shop. "Unenrolled preparers are responsible for the most number of cases where filers get into trouble," said Dianne Glass, the IRS's Taxpayer Advocate for South Texas. "They don't have anyone to regulate them, any testing requirements, or any continuing education requirements to stay up on tax law." | ||||||
| Texas - Sales And Use Tax - Occasional use tax return | January 2005 | |||||
| The January 2005 issue of Texas Tax Policy News reports that the Texas Comptroller's Office has developed a use tax return for Texans who do not have sales tax permits but need to pay Texas use tax on goods purchased from out-of-state suppliers. Form 01-156, Texas Occasional Use Tax return, is available on-line from the Comptroller's website at http://window.state.tx.us/taxinfo/taxforms/01-forms.html. Texas allows a credit for legally imposed sales or use tax paid to another state. | ||||||
| "Pennies on the Dollar" Claims - IR-2004-17 | Feb. 3, 2004 | |||||
| WASHINGTON — The Internal Revenue Service today issued a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise Program. Some promoters are inappropriately advising indebted taxpayers to file an Offer in Compromise (OIC) application with the IRS. This bad advice costs taxpayers money and time. An Offer In Compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. “This program serves an important purpose for a select group of taxpayers. But we are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements,” said IRS Commissioner Mark W. Everson. “We urge taxpayers not to be duped by high-priced promises.” The OIC may be considered only after other payment options have been exhausted. If taxpayers are unable to pay their taxes in full, there are other payment options, such as monthly installment agreements, that must be explored before an OIC can be submitted. | ||||||