REPLAY today’s session – you can listen and SEE the session

Today’s topics included:

• Introductions of some participants
• Testing of microphones ;~)
• Questions about the new PTIN Registration
• Brief overview of the new Testing issue for “Registered Tax Preparers”.
• NAEA’s survey about the Enrolled Agent title – and changes.
• Discussion of  IRA or 401(k) to Roth conversion.
• Fiscal Years and when appropriate to use them.
• S Corporations – and the new legislative threat.
• EFTPS
• Estimated tax payments vs payroll
• Potential Extension of the Homebuyer’s Credit sales closing deadline.
• And more

Today TaxMama wants to talk to you about the plethora of new laws, tax confusion, IRS inconsistency – and how you can do something about it.  http://taxmama.com/forum/taxquips/tell-it-to-irs 

Today TaxMama wants to give you some pointers on how to use the IRS Open House days effectively. People write to us with IRS problems all the time. I wish I could solve them all for you. But, generally, the only way to solve your problem is for you to take action. Here’s your chance to get them resolved.

 Courtesy of NAEA – www.naea.org

On Wednesday, April 14, 2010,  the House passed by on overwhelming majority (399-9) HR 4994 (The Taxpayer Assistance Act of 2010), which was sponsored by Ways and Means Oversight Subcommittee Chairman John Lewis (D-GA). The bill includes several items of note to enrolled agents and, specifically it:

The tax filing deadline is approaching. If you don’t file your return and pay your tax by the due date you may have to pay a penalty. Here are nine things the IRS wants you to know about the two different penalties you may face if you do not pay or file on time.

1. If you do not file by the deadline, you might face a failure-to-file penalty.
2. If you do not pay by the due date, you could face a failure-to-pay penalty.
3. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return and explore other payment options in the meantime.
4. The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
5. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
6. You will have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.
7. If you filed an extension and you paid at least 90 percent of your actual tax liability by the due date, you will not be faced with a failure-to-pay penalty if  you file by the extended due date and pay the remaining balance with your return.
8. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.
9. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

Link:

• Avoiding Penalties and the Tax Gap

Listen here  -  Tax Tips for Individuals                         Read the script of the show below:

PROGRAM 1: Tax Tips for Individuals

Originally aired:   Thursday, March 25    10:00 a.m. – 11:00 a.m. EDT

Introduction – Tax Mama

• Welcome and Introductions

o        Thanks for joining

§                    Introduce hosts:

§                    Chris Wilson, Master Tax Advisor

o        Wilson has been a master tax advisor with H&R Block for 7 years. He also has experience in business management, coaching and investing.  He holds a Bachelor of Arts in Business Administration with a concentration in Accounting. His areas of expertise include: investments/stock options, home ownership, real estate rentals or vacation homes, healthcare expenses, non-U.S. citizens, income earned outside the U.S., small business, sole proprietor or self-employed.  He resides in Shelby, NC and served as a business mentor for Duke University Fuqua School of Business summer leadership program in 2006 and 2007.

§                    Leigh Mutert, CPA
Mutert obtained her MBA from the University of Kansas and is a licensed CPA in Kansas.  After beginning her career with Deloitte, she took time off to raise a family.  She joined H&R Block in 2002 where she has successfully worked in roles ranging from tax professional to Business Development for the online products group.  She is currently the Community Manager in the Social Media Marketing Department.

§                    My name is Eva Rosenberg, Enrolled Agent

• I am the Internet’s TaxMama at TaxMama.com – author, nationally syndicated tax columnist at Dow Jones’ MarketWatch.com. I have decades of tax experience, starting with National CPA firms and spending the last 10 years answering your questions at TaxMama.com .
• Brief overview of topics to discuss

o        Key tax law changes

o        What to know if you were unemployed and looking for a job in 2009

o        Critical tips for last minute filers

• We encourage questions – this is an interactive program

Today TaxMama hears from Michael in California with a sensible question. “I have a federal tax liability from past years. For 2009 I own the feds $1,000. I have a refund due from the state of California of $1,700. The state will apply my return to the past liability. Is there any way that I can get CA to apply my refund to the current tax year liability, instead of the past debt?”

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. The home office deduction is available for homeowners and renters, and applies to all types of homes, from apartments to mobile homes.

However, the Internet may provide a new medium for promoters to sponsor illegal tax avoidance schemes. Many of these schemes involve the use of fictitious online businesses including online retail and services, online auction sales, and bartering. Some of these tax avoidance schemes suggest the conversion of a hobby or recreational activity into a “business” in order to claim personal expenses improperly as business expenses.

Taxpayers should regard as highly suspect any investment scheme or promotion that claims to allow a person to deduct what would normally be personal expenses and not ordinary and necessary business expenses. As always, a business must truly exist prior to claiming any business expenses.

Requirements

In order to deduct expenses related to the business use of your home, you must carry on a “bona fide” business, as well as meet other specific requirements. Even then, your deduction may be limited.

To qualify to claim expenses for the business use of your home, your use of the business part of your home must be exclusive, regular, for your trade or business,

and

The business part of your home must be one of the following:

• Your principal place of business

• A place where you meet and deal with customers in the normal course of your trade or business or
• A separate structure you use in connection with your trade or business.
• Personal Expenses or Business Expenses

Most taxpayers with home-based businesses accurately report their income and expenses, while still enjoying the benefits that a home-based business can offer.

However, some unscrupulous promoters advise taxpayers incorrectly that they can operate any type of unprofitable “business” out of their home and claim personal expenses as business expenses. Taxpayers cannot transform nondeductible personal living expenses into deductible business expenses, regardless of how convincing the information in the promoter’s marketing materials may seem.

These are generally not deductible as business expenses:

• Deducting all or most of the cost and operation of a personal residence. For example, placing a calendar, desk, file cabinet, telephone or other business item in each room does not increase the amount that can be deducted.

• Paying children a salary for answering telephones or washing cars.
• Deducting education expenses from salaries paid to children wrongfully claimed as employees.
• Deducting excessive car and truck expenses when the vehicle was used for both personal and business use.
• Deducting personal furniture, home entertainment equipment or children’s toys.
• Deducting personal travel, meals and entertainment under the guise that everyone you encounter is a potential client.
• Taxpayers should also be aware of depreciation recapture rules when assets are later sold.

If you have questions on how to amend your return, please contact the Internal Revenue Service at 800-829-1040.

For questions regarding specifics on tax schemes, or to report a possible scheme, call 866-775-7474 or send an e-mail to the IRS Tax Shelter Hotline.

• Ask TaxMama :: Where taxes are fun and answers are free

• www.TaxQuips.com :: The number ONE free tax podcast online
• IRS.gov :: (keyword search Business Expenses) for more information on deductible home business expenses.

• IRS Tax Shelter Hotline :: For questions regarding specifics on tax schemes

• IRS Criminal Enforcement :: additional information on home-based business tax avoidance schemes and other related issues.

• IRS Publication 587 :: Business Use of Your Home
• IRS Publication 463 :: Travel, Entertainment, Gift, and Car Expenses

• IRS Publication 334 :: Tax Guide for Small Business

• IRS Publication 17 :: Your Federal Income Tax for Individuals

• http://www.taxquips.com/index.php?id=1158

  The Internal Revenue Service just released the 2009 update to the Allowable Living Expense Standards on March 1. The ALE standards are used to reduce subjectivity in determining what a taxpayer may claim as basic living expenses necessary to avoid undue hardship when the taxpayer must delay full payment of a delinquent tax. The standard allowances provide consistency and fairness in collection determinations by incorporating average expenditures for citizens in similar geographic areas.

  See all the links to the National and Local Standards in the Resource Box below.

  Collection Financial Standards are used to help determine a taxpayer’s ability to pay a delinquent tax liability. Allowable living expenses include those expenses that meet the necessary expense test. The necessary expense test is defined as expenses that are necessary to provide for a taxpayer’s (and his or her family’s) health and welfare and/or production of income.

  National Standards for food, clothing and other items apply nationwide. Taxpayers are allowed the total National Standards amount for their family size, without questioning the amount actually spent.

  National Standards have also been established for minimum allowances for out-of-pocket health care expenses. Taxpayers and their dependents are allowed the standard amount on a per person basis, without questioning the amount actually spent.

  Maximum allowances for housing and utilities and transportation, known as the Local Standards, vary by location. In most cases, the taxpayer is allowed the amount actually spent, or the local standard, whichever is less.

  Generally, the total number of persons allowed for necessary living expenses should be the same as those allowed as exemptions on the taxpayer’s most recent year income tax return.

  If the IRS determines that the facts and circumstances of a taxpayer’s situation indicate that using the standards is inadequate to provide for basic living expenses, we may allow for actual expenses. However, taxpayers must provide documentation that supports a determination that using national and local expense standards leaves them an inadequate means of providing for basic living expenses.

  Note: There are different standards in use for bankruptcy estates.

  • Ask TaxMama :: Where taxes are fun and answers are free

  • www.TaxQuips.com :: The number ONE free tax podcast online

  • IRS Collection Financial Standards :: Amounts you can use for offers with compromise and installment agreements

  • U. S. Trustee Program :: Expense information for use in bankruptcy calculations
  ]]> http://taxmama.com/asktaxmama/new-irs-collection-financial-standards/feed/ 0 http://taxmama.com/asktaxmama/industry-issue-resolution-program/ http://taxmama.com/asktaxmama/industry-issue-resolution-program/#comments Fri, 06 Mar 2009 14:54:00 +0000 TaxMama http://www.taxquips.com/index.php?id=1149

  IR-2009-18, March 5, 2009

  WASHINGTON — The Internal Revenue Service is encouraging business taxpayers, associations and other interested parties to submit to the Industry Issue Resolution (IIR) Program tax issues for resolution involving a controversy, a dispute or an unnecessary burden on business taxpayers.

  Though submissions can be made at anytime for consideration in the IIR program, submitted issues received by March 31, 2009, will be considered for acceptance in April and, if accepted, included on the Treasury/IRS Priority Guidance List.

  The objective of the IIR program is to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance. In past years, issues have been submitted by associations and others representing both small and large business taxpayers, resulting in tax guidance that has affected thousands of taxpayers.

  Recent submissions accepted into the IIR program include:

  • Technical Terminations of publicly traded partnerships.

  Guidance issued as a result of the IIR program includes:

  • Auto Last In First Out – for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, LIFO inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars. (Revenue Procedure 2008-33)

  • Valuation of Parts Inventory by Heavy Equipment Distributors (Revenue Procedure 2006-14)
  • Clarification regarding circumstances when facsimile signatures may be used to sign employment tax forms. (Revenue Procedure 2005-39)
  • Explanation of the circumstances under which insurance companies that make incentive payments to health care providers will be permitted to include those payments in unpaid losses. The revenue procedure also provides procedures under which a taxpayer may obtain automatic consent of the Commissioner to change their accounting method for such payments. (Revenue Procedure 2004-41)

  IIR project selections are based on the criteria set forth in Revenue_Procedure_2003-36. For each issue selected, a multi-functional team consisting of IRS, Chief Counsel, and Treasury personnel will be assembled. The team will gather and analyze the relevant facts from industry groups and taxpayers and, wherever possible, recommend guidance. This benefits both taxpayers and the IRS by saving time and expense that would otherwise be expended on resolving the issue through examinations.

  Requests for guidance on tax issues under the IIR program can be submitted at any time to IIR@irs.gov. Submissions received are reviewed semi-annually with selections next being made from issues submitted by March 31, 2009.

  • Ask TaxMama :: Where taxes are fun and answers are free

  • www.TaxQuips.com :: The number ONE free tax podcast online

  • IRS Announcement :: IRS Seeks New Issues for the Industry Issue Resolution Program

  • IRS Revenue Procedure 2004-41 :: Industry Issue Resolution Program
  • IIR@irs.gov. :: Submit requests for guidance on tax issues under the IIR program
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