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Tax Law

IRS Electronic Tax Administration Advisory Committee Delivers Report to Congress

By Tax Law

The Electronic Tax Administration Advisory Committee (ETAAC) recently presented its 2012 Annual Report to Congress during a public meeting. The report discusses five groups of recommendations on issues in electronic tax administration.

Highlights of the report include recommendations on the following key outcomes:

• Reinforcing standards for security, privacy, and fraud prevention

• Moving forward on e-file of employment tax and information tax returns,

• Creating Internet tools for taxpayers and tax professionals,

• Leveraging tax delivery service channels and

• Funding Modernized e-File and Customer Account Data Engine to completion

“Through its recommendations, ETAAC provides an important voice to the IRS,” said David Williams, Director of the Return Preparer Office. “We appreciate the long hours and focus the ETAAC brings, and we will carefully review these recommendations.”

The 14-member committee provides an organized public forum for discussion of electronic tax administration issues and the overriding goal that paperless filing should be the preferred and most-convenient method of filing tax and information returns.

“ETAAC commends IRS on surpassing its goal and receiving more than 80 percent of individual tax returns electronically. IRS can now turn its attention to employment tax returns and re-focus on delivering electronic interactions to taxpayers and tax professionals,” said Mark Steber, ETAAC Chairman.

ETAAC submits an annual progress report to Congress each June. The IRS Electronic Tax Administration created the ETAAC in 1998 as required by the IRS Restructuring and Reform Act of 1998.

For more information on your tax return, visit www.irs.gov. Please contact our office at (941) 906-1231 for an initial consultation if you need legal advice.

January 15, 2013
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How to Protect your Records this Hurricane Season

By Tax Law

With the early start of this year’s hurricane season, the Internal Revenue Service encourages individuals and businesses to safeguard themselves against natural disasters by taking a few simple steps.

Create a Backup Set of Records Electronically

Taxpayers should keep a set of backup records in a safe place. The backup should be stored away from the original set.

Keeping a backup set of records –– including, for example, bank statements, tax returns, insurance policies, etc. –– is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original records are provided only on paper, they can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a backup storage device, like an external hard drive, or burn them to a CD or DVD.

Document Valuables

Another step a taxpayer can take to prepare for disaster is to photograph or videotape the contents of his or her home, especially items of higher value. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.

A photographic record can help an individual prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area.
Update Emergency Plans

Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

IRS Ready to Help

If disaster strikes, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.   Back copies of previously-filed tax returns and all attachments, including Forms W-2, can be requested by filing Form 4506, Request for Copy of Tax Return.

For more information on your tax return and tax filing deadlines, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice at (941) 906-1231.

October 11, 2012
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Should I Hire A Tax Attorney?

By Tax Law

An experienced tax attorney can help with a variety of tax and business issues. In addition to the obvious need of legal help when facing IRS collections, a tax lawyer can also help companies structure themselves to the best tax advantage allowing for the minimum taxes required to be filed.

However the most urgent time to hire an experienced IRS tax lawyer is when a taxpayer or business is facing a large delinquent tax problem or a dispute over the amount of taxes owed.

Other than professional and technical benefits, working with a skilled tax attorney can offer the troubled taxpayer some peace of mind. An experienced tax lawyer will know the steps to take to halt IRS collections efforts during negotiation of the tax liability and may even reduce the amount owed to the IRS. It can be a big relief to know steps have been taken to bring the tax debt problems back under control.

For more information on your tax return and tax filing deadlines, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice at (941) 906-1231.

October 3, 2012
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The Taxpayer Advocate Service –Your Voice at the IRS

By Tax Law

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS. They help taxpayers who are experiencing economic harm, taxpayers who are seeking help in resolving problems with the IRS and those who believe an IRS system or procedure is not working as it should. Here are ten things every taxpayer should know about TAS:

  • This service is free and tailored to meet your needs.
  • You may be eligible for TAS help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn’t working as it should.
  • The worst thing you can do is nothing at all!
  • TAS helps taxpayers whose problems in dealing with the IRS are causing financial difficulty or significant cost, including the cost of professional representation.  This includes businesses as well as individuals.
  • The Taxpayer Advocate Service is your voice at the IRS.
  • If you qualify for help, they’ll do everything they can to get your problem resolved.  You will be assigned to one advocate who will be with you at every turn.
  • They have at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico.  You can call your local advocate, whose number is in your phone book and in Pub. 1546, Taxpayer Advocate Service — Your Voice at the IRS.  You can also call their toll-free number at 1-877-777-4778.
  • As a taxpayer, you have rights that the IRS must abide by in its dealings with you.  The tax toolkit at www.taxtoolkit.irs.gov can help you understand these rights.
  • TAS also handles large-scale or systemic problems that affect many taxpayers.  If you know of one of these broad issues, please report it to TAS through the Systemic Advocacy Management System.
  • You can get updates on hot tax topics by visiting the TAS YouTube channel at www.youtube.com/tasnta and the TAS Facebook Page.

 

For more information on your tax return and tax filing deadlines, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice at (941) 906-1231.

September 26, 2012
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Long-Term Care Expenses Can Be Tax Deductible

By Long-Term Care, Tax Law

Long-term care expenses quickly add up, but it is good to know that many long-term care expenses can be deducted from your taxes. Under the tax code, expenses for medical care may be claimed as an itemized deduction if they exceed 10 percent of adjusted gross income. The definition of medical expenses includes the cost of long-term care if a doctor has determined you are chronically ill. “Chronically ill” means you need help with activities like eating, going to the bathroom, bathing, and dressing, or you require substantial supervision due to a severe cognitive impairment.

For more information on your tax return, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice at (941) 906-1231.

September 12, 2012
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Tax Tips-Which Records Should you Keep?

By Tax Law

After you file your taxes, you will have many records that may help document items on your tax return. You will need these documents should the IRS select your return for examination. Here are five tips from the IRS about keeping good records.

  1. Normally, tax records should be kept for three years.
  2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
  3. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
  4. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

For your tax advice needs, please contact our office for an initial consultation at (941) 906-1231.

September 6, 2012
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Health Insurance Premium Tax Credit

By Health, Tax Law

Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On May 18, 2012, the IRS issued final regulations which provide guidance for individuals who enroll in qualified health plans through Exchanges and claim the premium tax credit, and for Exchanges that make qualified health plans available to individuals and employers.

The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.

Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer. Additional information about the Exchange can be found at www.healthcare.gov and in IRS REG-131491-10 issued on Aug. 12, 2011.

For your tax advice needs, please contact our office for an initial consultation at (941) 906-1231.

August 29, 2012
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Business or Hobby? Answer Has Implications for Deductions

By Tax Law

The Internal Revenue Service reminds taxpayers to follow appropriate guidelines when determining whether an activity is a business or a hobby, an activity not engaged in for profit.

In order to educate taxpayers regarding their filing obligations, this fact sheet explains the rules for determining if an activity qualifies as a business and what limitations apply if the activity is not a business. Incorrect deduction of hobby expenses account for a portion of the overstated adjustments, deductions, exemptions and credits that add up to $30 billion per year in unpaid taxes, according to IRS estimates.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

In order to make this determination, taxpayers should consider the following factors:

  • Does the time and effort put into the activity indicate an intention to make a profit?
  • Does the taxpayer depend on income from the activity?
  • If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
  • Has the taxpayer changed methods of operation to improve profitability?
  • Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
  • Has the taxpayer made a profit in similar activities in the past?
  • Does the activity make a profit in some years?
  • Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

For your tax advice needs, please contact our office for an initial consultation at (941) 906-1231.

August 23, 2012
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Small Business Tax Workshops

By Tax Law

The Virtual Small Business Workshop is available on CD and online to help new small business owners understand and meet their federal tax obligations.

Small business workshops, designed to help the small business owners understand and fulfill their federal tax responsibilities, are held at various locations throughout the country. Workshops are sponsored and presented by IRS partners specializing in federal tax.

Workshop topics vary from a general overview of taxes to more specific topics such as recordkeeping and retirement plans. Although most are free, some workshops have fees paid directly to the sponsoring organization, not the IRS.

For your tax advice needs, please contact our office for an initial consultation at (941) 906-1231.

August 8, 2012
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Estate Tax

By Estate Planning, Tax Law

The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 ). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your “Gross Estate.” The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.

Once you have accounted for the Gross Estate, certain deductions are allowed in arriving at your “Taxable Estate.” These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify.

After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit.

Most estates do not require the filing of a federal estate tax return. Under current law, a filing is required for estates with combined gross assets and prior taxable gifts exceeding $5,000,000 or more for decedent’s dying in 2011.

August 2, 2012
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