New Jersey decision on Information Services - Blog PostThe New Jersey Department of Taxation issued Publication ANJ–29, which offers new guidance regarding what constitutes a taxable information service. New Jersey sales tax applies to the collection, compilation, or analysis of information, where the purpose of the transaction is the information itself, not a related professional service. Known as “information services,” these transactions commonly include sales of mailing lists, market research reports, and credit reporting services. Sales of information services can also include fees charged for access to information, such as stock quotes or legal research, delivered in any medium, electronic or tangible.

Information services do not include the furnishing of data for the purposes of a larger professional service. For example, a lawyer who gathers personal information about a client during the course of representation is doing so for purposes of legal representation. In this instance, the object of the transaction is not information collection itself. As such, the transaction would not qualify as a taxable information service. Along the same lines, transactions for the sale of data that are personalized, and not incorporated into reports furnished to others, are similarly not taxable information services. Custom market research reports, for example, are created for one client and not for outside distribution, and are therefore not taxable. Read More

Blog post why the United States is fed up with Swiss Banks.Working with a Swiss lawyer and others, the United States businessman father arranged for over $12 million in the undeclared accounts to be left to his surviving spouse and five of his children, including Seggerman.

As a result of the successful implementation of that plan, and to hide the undeclared funds from the IRS, Seggerman, who, together with three of his siblings, was an executor of his father’s estate, signed a tax return for his father’s estate that falsely under-reported the gross assets of the businessman father’s estate. In particular, the estate tax return fraudulently failed to report over $5 million left to the businessman father’s wife and over $7.5 million to be split among five of his children.

In addition, the Swiss lawyer thereafter assisted Seggerman’s siblings, including Suzanne Seggerman, Yvonne Seggerman, and Edmund Seggerman, in setting up undeclared Swiss bank accounts to hold the money left to them by their father.

Seggerman assisted his brother in surreptitiously transferring funds from the brother’s Swiss account to a bank account for a foundation controlled by Seggerman, who thereafter filtered the funds to the brother in the United States, labeling the transfer as “loans.” Read More

Repeal of Sales Tax on Computer and Software Services Blog PostJust weeks after passing the Commonwealth’s Transportation Finance Bill (“H.B. 3535”) through a legislative override, twenty top business leaders in Massachusetts filed an initiative petition to the state’s attorney general to repeal the law that made various computer services subject to sales and use tax. H.B. 3535 was passed into law on July 24, 2013 and took effect a week later on July 31, 2013. If the Attorney General deems the petition constitutional, the petitioners must collect 68,911 certified voter signatures by December 4, 2013. The Legislature will then view the petition and determine whether to repeal, modify, or take no action. If the Legislature takes no action, the petitioners will need to collect an additional 11,485 signatures. At that point, Massachusetts voters would decide whether to repeal the tax when they head to the polls in November of 2014. Besides business leaders moving to repeal the bill, Massachusetts State Senator Karen Spilka (D-Ashland) filed petition, S.D. 1872, to repeal the new sales tax. Senator Spilka previously voted in favor of H.B. 3535.

H.B. 3535 has created quite a buzz around Massachusetts, as businesses scramble to understand and properly apply sales and use tax to computer system design services and the modification, integration, enhancement, installation, or configuration of standardized software. As of August 9, 2013, the Massachusetts Department of Revenue publication Frequently Asked Questions: The New Computer and Software Services Tax Effective 7/31/13 had ballooned to fifty five questions, as the department continues to add new questions submitted by taxpayers. The Read More

British Virgin Islands agrees to US FATCA Blog PostThe leader of the British Virgin Islands says the Caribbean territory has started talks with the United States Treasury to comply with a law designed to counter offshore tax evasion.

The tiny islands are one of the world’s top offshore trust jurisdictions and the incorporated registry for hundreds of thousands of companies. Premier Orlando Smith said August 20, 2013 that the territory is negotiating an intergovernmental agreement with the United States to comply with the US Foreign Account Tax Compliance Act (FATCA).

Smith says the islands are “not being forced or coerced” into finalizing a pact under the United States law that will take effect next year.

Smith said the islands’ crucial financial services industry has been consulted and agrees with the move.

“We are of the very considered opinion that this course is the best one to adopt for the BVI,” Smith said at a press briefing on the main island of Tortola.

The Cayman Islands announced last week that it had reached agreement with the US to provide information on accounts held by US citizens under the same law.

In accordance with Circular 230 Disclosure

Swiss Banks agreeing to US Plan for their depositors.Swiss banks are ready to pay hefty fines for sheltering United States tax fugitives under the terms of a new deal given the green light by the Swiss government on Wednesday.

While official details will not be concluded until the United States signs the agreement, both the cabinet and the Swiss Bankers Association (SBA) said the deal should finally settle past misdemeanors to the satisfaction of all parties without breaking Swiss law. “The signing of the joint statement should enable Swiss banks to resolve the tax dispute with the United States,” the government said in a short statement. The SBA hailed the agreement as the “final step towards a solution”, adding that “the protection of employees [threatened with criminal prosecution in the US] can now be afforded to the best possible extent.”

The agreement between the Swiss government and banks sidesteps the need for parliamentary approval, a crucial point given the rejection by both houses of parliament in June of the so-called Lex USA deal that promised to find an earlier solution.

According to the United States Justice Department, the total penalties expected to be levied against banks under the agreement will amount to hundreds of millions and possible over a billion dollars. Read More

Reference Cliff Jernigan's eBook Corporate Tax Audit SurvivalIt is not easy to find someone willing to talk about the inner sanctum of the Internal Revenue Service. A View of The IRS Through An Insiders Eyes-Corporate Tax Audit Survival written by Cliff Jernigan reveals the inner workings of this secretive organization. The book is a must read for anyone who wants to understand how the IRS operates from the inside out. Cliff Jernigan was selected to serve as a liaison between the private sector and the government sector to accomplish the following: Improving relations between the private sector and the IRS; Reducing the audit time and cost burden for industry and the IRS; Help U.S. industry be more competitive; and introduce private industry efficiency to the IRS. In order to understand how to fix the IRS one must understand how things work in an organization shrouded in secrecy. He identifies the problems in the IRS and provides solutions that effect the change that is needed within the organization.

What is interesting is that he wrote this book in 2005 where the problems and inefficiencies within the IRS were previously identified by what is known as the “Team of 38”. Unknown to many, on August 25, 1999, Bob Wenzel, Deputy Commissioner of the IRS, administered the oath of office to Larry Langdon, VP Tax, Licensing and Customs at the headquarters of Hewlett Packard who left the company after many years of outstanding service to become the first Commissioner of the Large and Mid-Size Business Division (LMSB). Larry Langdon is now with the firm of Mayer Brown in Palo Alto, CA and advises global corporate clients regarding tax controversy matters. Larry Langdon is Read More

Trading and Investing tipsI have another new client who is a day trader and wow is he good at it! Even though he has another job he makes so much more money as a trader that this ultimately is his primary vocation. The following are a few things I’ve learned in helping this new client with his tax obligations.

1. If you are a day trader who has not elected to mark your portfolio to market accounting method under Internal Revenue Code 475 your expenses are deductible on IRS Form 1040 Schedule C.

2. The most commonly referenced Business Code provided on the Schedule C is 523900. Other financial investment activities (including investment advice) and in my opinion is the most appropriate for a person that meets the definition of “day trader” regardless of the accounting method chosen.

3. Regarding expenses, lodging and meals while away from home at investment seminars are allowable deductions assuming you actually qualify as a day trader under IRC Sec. 274(h)(7) which denies a Sec. 212(l) deduction for (non-business related) “expenses allocable to a convention, seminar, or similar meeting.” However, the Tax Court held that a day trader can deduct the cost of a seminar in securities day trading and related travel expenses under IRC Sec. 162. Read More

Swiss bank employees handing over US Depositor information to the United States.Thousands of Swiss bank workers have seen their data handed over to justice authorities in the United States and are now living with a considerable amount of uncertainty.

Two years ago the US Department of Justice (DOJ) started investigating about ten Swiss banks suspected of helping thousands of wealthy Americans illegally evade taxes.

The DOJ demanded that Swiss banks supply it with all the data of controversial transactions, including the names of employees who dealt with clients subject to US tax laws and lists of American clients who have moved assets out of their accounts to another bank (Leavers Lists).

The uncertainty felt by bank workers certainly didn’t ease after the Swiss parliament’s rejection in June of the “Lex USA”, a deal the Swiss cabinet hoped would fix the legal conditions for handing over data and solve the tax evasion dispute between the two countries.

At the beginning of July, Finance Minister Eveline Widmer-Schlumpf presented a “plan B”, under which the cabinet agreed to give banks special permission to cooperate with the United States authorities, paving the way for financial institutions to share data in a bid to avoid criminal charges for allegedly helping tax dodgers. Read More

Summer rentals and vacation homes provide some rental expense deductions. Summer rentals for 2013 have been stronger than they have been in years, and purchases of vacation homes are on the rise after years of a housing slump. There are tax write-offs for owning a second home. What’s more, the vacation home can provide rental opportunities. It’s understandable to think of vacation homes as only in terms of beachfront or lakefront properties. The tax law doesn’t think this way. Vacation homes aren’t limited to waterfront condos or ski chalets; they can include a boat or an RV, as long as the property includes sleeping, cooking, and toilet facilities. Even time shares may qualify for certain tax breaks that go with home ownership.

Reporting Rental Income

Rental income usually is includable in gross income, but can be offset by certain expenses related to the vacation home (explained below). However, there’s one exception that can give you tax-free income. You do not have to report the rent you receive for a rental that is no more than 14 days. Thus, if you rent your beachfront property for 10 days, the rent you receive is tax free.

Deducting Rental Expenses

Three costs related to the ownership of a vacation home can be taken if you itemize deductions. These deductions are allowed without regard to whether you rented the property: Read More

TaxConnections Picture - Time and MoneyThe Cayman Islands, known as a haven for wealthy Americans seeking to stash cash overseas without scrutiny from the United States government, is about to become less secret.

An agreement between the countries will put in place the Foreign Account Tax Compliance Act, or FATCA. The 2010 law makes it tougher to hide money overseas because foreign banks must report their accounts to the U.S. Internal Revenue Service or face, in some cases, a 30% withholding tax.

ds is a major financial center and home to operations for dozens of banks, funds and wealth-management entities, according to Bloomberg BNA.

Among major banks that do business in the Cayman Islands are:

* the Royal Bank of Canada,
* HSBC Holdings Plc (HSBA),
* Bank of Nova Scotia,
* Bank of America Corp.,
* Deutsche Bank AG, UBS AG, and
* CIBC FirstCaribbean International Bank. Read More

Energy Tax Incentives for commercial building owners - Blog PostWhether a commercial property owner is undergoing new construction or remodeling, energy tax incentives should certainly be utilized to essentially tax effect the commercial building owner’s expenditures for undergoing the energy efficient renovation project.

As enacted in The Energy Policy Act of 2005 (hereinafter “EPAct”), the I.R.C. § 179D Energy Tax Deduction for building envelope efficiency encourages building owners to “Build Green” to not only save money by reducing their utility bills on a carry-forward basis, but to also reduce their tax liability on their tax returns as well.

As a synopsis of I.R.C. § 179D, commercial building owners can take a federal-level tax deduction of up to $1.80 per square foot of the building’s envelope if they install property that reduces energy and power costs. These installations need to be a part of the building’s interior lighting systems (i.e., up to .60 per square foot); Heating, Ventilation, and Air Conditioning systems (hereinafter “HVAC”; i.e., .60 per square foot for newly installed HVAC equipment); or building envelope (i.e., .60 cents per square foot for windows, doors, roofs or insulation). The deduction is allowed for both new construction and remodeling and the building must be placed in service between 2006 through 2013. Read More