IRS To Furlough Employees On Five Days; Operations Will Shut Down Entirely

The IRS will be closed for business for five days falling between May 24 and August 30. As stated in an NTEU Press Release (4/19/13).

Late last week, the National Treasury Employees Union (NTEU) announced that the IRS is sending out furlough notices this week to the entire IRS workforce, identifying the five following furlough days where the agency will shut down entirely: May 24, June 14, July 5, July 22, and Aug. 30. The thirty-day notices to employees also leave open the possibility of another two unpaid furlough days.

On those furlough days, all public operations of the IRS will be shut down, leaving taxpayers without access to information and assistance from frontline workers. According to the president of the NTEU, on those days, phone calls to the IRS will go unanswered and Taxpayer Assistance Centers across the country will have closed’ signs in their windows. The furloughs are being driven by the ongoing sequestration that is forcing federal agencies, including the IRS, to severely slash their budgets.

NTEU is the largest independent federal union, representing 150,000 employees in 31 agencies and departments.

Over the past three years, the Florida Department of Revenue has targeted a growing number of businesses for sales-tax audits.  While the state has always taken a hard line in identifying tax fraud, it has recently stepped up its enforcement efforts and narrowed its focus on specific businesses and industries, including, but not limited to, convenience stores, used car dealers and VoIP service providers. Not only do targeted businesses face stiff penalties for under-reporting sales tax, but owners and managers also face criminal prosecution and the possibility of imprisonment for five to 30 years.

On the surface, sales tax appears to be a fairly simple and straightforward concept.  However, laws governing state and local taxes are often changing, and the interpretation of them can be rife with hidden dangers. Some of the most problematic gray areas of sales tax compliance involve commercial real estate rentals, manufacturing, and Internet and cloud computing.

Commercial Real Estate Rentals

Florida is the only state that levies a sales tax on commercial real estate rentals.  In fact, this tax is the number one Read More

WHAT IS IT?

The Local Property Tax or LPT is a self assessed tax payable by an individual on the market value of his/her “residential property or properties” located in Ireland.

WHAT DOES THAT MEAN?

It means the LPT is a self assessed tax.  You are responsible for valuing your own property, filing your tax return and making the relevant payment.

WHAT’S MEANT BY “Residential Property?”

A “residential property” is any building (or part of a building) which is used or is suitable for use as a residence.  It includes the driveway, yard, garden, garages, sheds and any other land associated with the property up to one acre in area.

HOW IS THE PROPERTY VALUED?

Because the LPT is a self assessed tax the property owner must decide on the market value of the property.  Once the market valuation has been made it will hold for LPT purposes until the end of 2016 regardless of any improvements or renovations to the property or indeed any changes to the property market. Read More

The cost of a college education is higher year after year, with no relief to increases in sight. The annual cost at an Ivy League school is over $60,000 a year; even state schools for in‑state students is over $20,000 in some locations. How can you manage to pay all or even some of the cost for yourself, your spouse, or your child? It isn’t easy, but tax incentives can help. Here are some tax‑advantaged strategies for education savings.

529 Plans

There are two types of state plans that can be used to save for higher education:

Tuition plan. Contributions pay a fixed amount of state school tuition (depending on the amount of contributions and the projected tuition).

Savings plan. Contributions are invested and available to pay qualified expenses on a tax‑free basis.

There are no income limits on contributors. The amount you add to the plan is up to you. However, states impose account limits, so no contributions can be made when the value of the account reaches a set limit (e.g., $350,000 per beneficiary in California’s plan; $375,000 in New York’s plan; $394,000 in Florida’s plan). Read More

Tax Brand Visibility is an important concept for you to understand because if you do not have strong visibility online, no one knows you exist! Tax professionals with a smart tax branding strategy will get noticed and hired long before anyone else! Do you realize you can create a strong tax brand in less than thirty minutes? Do you realize that you most likely do not even have control of your very own tax brand right now? Someone else probably controls it and you need to take it back to increase your business opportunities. You need to pay attention to what I am about to teach you!

After spending months studying a secret you are about to learn, I am going to open your eyes to a huge obstacle to your success as a tax professional! Go online and conduct a search for yourself. How many clicks does it take to find you? What does a person have to go through to connect with you? Can someone only find you if they go through a site and pay to access you?  More than one billion times a year people go online for tax help so it is important to understand how one billion potential consumers of your tax expertise find you. Do they have to pay to find you? How many clicks does it take to find you?  Do you control access to your tax professional profile in one or two clicks? Do you realize 99% of consumers walk away when they realize they must pay to find your contact information?  Did you know you can now take control of your tax brand and people can find you in one click for free?

Recently, I contacted the Partner of a Big Four Firm and told him that I could not connect with him online after 20 clicks! That is more effort than most people would put forth to find him. I told him he was missing Read More

If you take one look at FEMA’s website, it’s clear that we are going to see a significant increase in the number of casualty losses going forward. Should you find yourself a victim of a disaster or a casualty or theft loss it is very important that you know what you are entitled to from a tax perspective.

The best resource for this besides the US Tax Code is IRS Publication 547, Casualties, Disasters, and Thefts.  Be sure to review before or as part of preparing IRS Form 4684 when reporting to the IRS. Another good resource of course is the Instructions to the Casualty and Loss Reporting Form 4684.

Most people understand the proper tax treatment of what is often referred to as “standard” casualty and theft losses.

1. calculate the cost basis of the property before the loss

2. determine the decrease in the fair market value of the property as a result of the loss.

3. From the smaller of the two, deduct any insurance or other reimbursement received.

4. Using IRS Form 4684 apply the deduction limits to determine the amount of our deductible loss.

Here is where it starts to get convoluted. Each loss must be reduced by $100. And you further reduce the total of all losses by ten percent of your adjusted gross income.

It’s also important to remember that the loss must be reported the year in which it has occurred.

Before deducting the loss, you must be able to prove that there was a loss. If the loss is from theft for example: Read More

The IRS often puts charitable deductions under the microscope. This area has been ripe for abuse in the past, but the rules for establishing and documenting gifts to charity were recently tightened. As the deadline for filing 2012 returns fast approaches, the IRS is reminding taxpayers and practitioners about these requirements by posting nine tips for securing charitable deductions.

1. To qualify for a deduction, a taxpayer must make the donation to a qualified charitable organization. You can’t deduct contributions you make to an individual, a political organization, or a political candidate.

2. Taxpayers must file Form 1040 and itemize deductions on Schedule A. If the total deduction for all non-cash contributions for the year is more than $500, taxpayers must also file Form 8283, Non-cash Charitable Contributions, with their tax return.

3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits that may be received in return for a contribution include merchandise, tickets to an event, or other goods and services.

What’s It Really Worth?

Generally, a taxpayer may deduct the fair market value of property donated to charity if he or she has held it longer Read More

♦ On tax day, it is good to remember a Charles Schultz a quote from the Peanuts comic strip: “No problem is so big or so complicated it can’t be run away from.”

♦ Two things in life are inevitable: death and taxes. We can’t say for certain when death will come. Tax day, however, is usually April 15, unless it falls on a weekend or holiday. Tracy Brunner, Standard-Examiner 3-12-12

♦ In this new, improved era, we can sweat over a computer keyboard and unfamiliar software program the night of April 15, then spill cold coffee into our computer, resulting in a shower of sparks and a small fire.— Steve Brewer  Albuquerque Tribune Columnist, March 30, 2006

♦ The IRS allows you to file for an automatic extension and file your return 6 months after the April 15 deadline. What if your doctor informed you that you that you had terminal illness and you were unlikely to live to April 15, but you could file for an automatic extension and be given to October 15?

♦ The doorbell, rings, and a man answers it. Here stands this plain but well-dressed kid, saying, “Trick or Treat!” The man asks the kids what he is dressed up like for Halloween. The kid replies, “I’m an IRS agent.” Then he takes 40 percent of the man’s candy, leaves, and doesn’t say thank you.

During 2012, one of my clients generated $50,000 of short-term capital gains by taking advantage of short-term swings in the market. That was quite an accomplishment!  However, since they pay tax at 33% (28% federal plus 5% state) on short-term gains, their tax bill on the gain amounted to $16,500.  That is still a net gain of $33,500 ($50,000-16,500) after taxes…which is nothing to sneeze at!  But, as I pointed out to them, if they were to do that inside their traditional IRA, the $16,500 paid in taxes would still be in their IRA working for them.

Their question to me was “What if we incur losses? We cannot deduct those losses in our IRA. Is this still a good idea?”  Personally, I think moving investments that produce short-term capital gains into an IRA (and off your annual income tax return) is a great idea. However, it is not a great place for losses…but neither is your non-retirement investment account.

Let’s assume the worse…the market suddenly tanks and you incur $60,000 of losses before you can convert everything to cash. If the losses occur in your non-retirement account you would be able to offset $3,000 of those losses against your other income each year. You would also be able to offset future capital gains (long-term and short-term). However, if the losses occur in your IRA, there is no $3,000/year deduction available. But, if you never recoup those losses, you obviously will never be taxed on the vanished $60,000. On the other hand, if you recoup the Read More

If people are looking to take a mortgage, the lender will usually ask to see accounts that have been certified by the accountant – another benefit of having a professional adviser, in addition to the potential tax savings that an adviser can bring.

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