Category: Taxation

Tax News — Week of 23 June 2024

Posted on | by Steve M. Windham, LLM, MBA, EA

United States
     California
     The California Supreme Court has ruled that the "Taxpayer Protection Act" must be removed from the ballot, as it would be a revision to California's Constitution.  This would require an amendment, rather than an initiative.
https://lao.ca.gov/BallotAnalysis/Initiative/2021-042

Africa
     Kenya
     Passage of the 2024 Finance Bill has resulted in protest that turned violent, with several protesters killed and injured by the police.
     https://www.voanews.com/a/several-shot-protesters-storm-kenya-s-parliament-after-lawmakers-approve-tax-hikes/7674258.html

Europe
     Denmark
     Starting in 2030, in Denmark, cows and pigs will be taxed for their contribution to producing greenhouse gases.
 https://learningenglish.voanews.com/a/cows-pigs-face-carbon-tax-in-denmark/7674742.html

 

California Middle Class Tax Refunds

Posted on | by Steve M. Windham, LLM, MBA, EA

The Internal Revenue Service, on February 10, 2023, has issued guidance on state tax payments to help taxpayers:

WASHINGTON — The Internal Revenue Service provided details today clarifying the federal tax status involving special payments made by 21 states in 2022.

The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.

During a review, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief. This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. Alaska is in this group as well, but please see below for more nuanced information.

Click here to view the complete News Release on the IRS website.

The California Franchise Tax Board has issues significant guidance on the California Middle Class Tax Refunds.

Concerning offsets/withholding:

  • The Middle Class Tax Refund payment is not taxable for California state income tax purposes.
  • The Middle Class Tax Refund payment will not be subject to offset for debts owed to Franchise Tax Board or other government agencies.
  • The Middle Class Tax Refund payments are not subject to garnishment orders, with the exception of orders in connection with child support, spousal support, family support, or a criminal restitution payable to victims. If you believe your Middle Class Tax Refund payment that was deposited with your financial institution has been levied/frozen in error, please contact the phone number provided by your financial institution.

Click here to view the California Franchise Tax Board, Public Service Bulletin on the California Middle Class Tax Refund payments.

Click here to view General Information on the California Franchise Tax Board Middle Class Tax Refund.

January 23, 2023 — IRS Official Start Date for the 2023 Tax Filing Season

Posted on | by Steve M. Windham, LLM, MBA, EA

The Internal Revenue Service has announced that January 23, 2023 will be the official start date of the 2023 tax filing season.  This is the first date that the IRS will be processing 2022 tax returns.  The deadline this year is April 18, 2023, as per the IRS website:

The filing deadline to submit 2022 tax returns or an extension to file and pay tax owed is Tuesday, April 18, 2023, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way as federal holidays. The due date is April 18, instead of April 15, because of the weekend and the District of Columbia's Emancipation Day holiday, which falls on Monday, April 17.

Taxpayers requesting an extension will have until Monday, October 16, 2023, to file.

This year, taxpayers and tax professionals should see improved service and processing times.   This is due to the passage of the Inflation Reduction Act, which has resulted in the IRS hiring more than 5,000 new telephone assistors, as well as more in-person staff to provide support to taxpayers.

Click here to view the complete article on the IRS website.

CALIFORNIA Taxpayers — The Middle Class Tax Refund

Posted on | by Steve M. Windham, LLM, MBA, EA

 

 

California Taxpayers, you may qualify for the California Middle Class Tax Refund.  This refund is being paid to a large group of California taxpayers with payments being sent out between October 2022 and January 2023.

For more information, please visit:

https://www.ftb.ca.gov/about-ftb/newsroom/middle-class-tax-refund/index.html?WT.ac=Global_banner_MCTR

I do not have any further information regarding distributions.  If you have any further questions, you will have to contact the California Franchise Tax Board.

January 2021 Economic Impact Payments

Posted on | by Steve M. Windham, LLM, MBA, EA

If you have not yet received your January 2021 Economic Impact Payment, you can check the status at the link below:

https://sa.www4.irs.gov/irfof-wmsp/login

More information is available the the link below:

https://www.irs.gov/coronavirus/get-my-payment

 

NOTE:

If you have not yet received your payment, all I can do is advise you to wait.  I have no access to additional information, and the IRS does not have any additional information beyond what's available on their website.  Unfortunately, many people have yet to receive their payments.  There is nothing you can do at this point, but to wait.

Tax Filing Season opens February 12, 2021

Posted on | by Steve M. Windham, LLM, MBA, EA

The 2021 tax filing season for Tax Year 2020 does not open until February 12, 2021.  As such, I am not meeting with individual clients for tax appointments before February 12, 2021.  I am; however, meeting with corporate clients, bookkeeping clients, and other business clients now so that we can finalize whatever is necessary to complete and file your business tax returns on time.  Should you have any questions, please contact me.  Thank you!

https://www.irs.gov/newsroom/2021-tax-filing-season-begins-feb-12-irs-outlines-steps-to-speed-refunds-during-pandemic

Enrolled Agent Study Materials

Posted on | by Steve M. Windham, LLM, MBA, EA

An Enrolled Agent is a credential awarded by the US Treasury/Internal Revenue Service that allows the credential holder to represent taxpayers before the Internal Revenue Service.  The Enrolled Agent credential is the highest credential that the Internal Revenue Service Awards.  For more information about the Enrolled Agent credential, please click here: https://www.irs.gov/tax-professionals/enrolled-agents

I strongly urge all of my accounting students to obtain their Enrolled Agent credentials.  While the exam is rigorous, it is manageable.  The exam is divided into three parts: 1) Individuals, 2) Businesses, and 3) Representation, Practices and Procedure.  Section 2--Businesses, is by far the most difficult section.

My recommendation is to use the Gleim Enrolled Agent Review Course.  This is the study course that I used for my Enrolled Agent exam, and I also plan to use Gleim for the CPA and CMA exams.  Here is a link to the Gleim Enrolled Agent Review Courses:  https://www.gleim.com/enrolled-agent-review/courses/

My recommendation is to purchase either the Traditional or Premium review systems.
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Tax Day Extended Due to COVID-19

Posted on | by Steve M. Windham, LLM, MBA, EA

The Internal Revenue Service has announced that, as of March 21, 2020, the following tax deadlines have been extended:

  1. The Federal income tax filing due date has been automatically extended to July 15, 2020.
  2. The Federal income tax payment due date has also been deferred to July 15, 2020, without penalties and interest, regardless of the amount owed by the taxpayer. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers, as well as those who pay self-employment tax.

For more information, please visit the IRS at:

https://www.irs.gov/newsroom/tax-day-now-july-15-treasury-irs-extend-filing-deadline-and-federal-tax-payments-regardless-of-amount-owed

 

The California Franchise Tax Board has announced that, due to the COVID-19 Crisis, tax deadlines have also been extended.  These extended due dates are similar to the Federal extended due dates.  Please review the following pages for more information:

https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/index.html?WT.ac=COVID-19

https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/extensions-to-file-pay.html

 

FRAUDULENT caller posing as IRS (Phishing scam alert!)

Posted on | by Steve M. Windham, LLM, MBA, EA

Yesterday, I received a telephone call from a 305 area code (Miami).  After listening to the message, I called them back.  They claimed to be from the Internal Revenue Service and that I had owed a past due amount and that they were going to pursue criminal charges against me.  Today, a client called me and informed me that she had received a similar call.

In both cases, these were phishing scams and not the Internal Revenue Service!  I refused to give them any information, and when I informed them that they were not the IRS they hung up on me.

DO NOT give these people any information!  The IRS does not call you if you owe them money.  When you owe the IRS money, you will be sent numerous notices via USPS First Class Mail.  It is very rare for the IRS to call a taxpayer!  They nearly always use USPS First Class Mail to contact taxpayers, especially if this is an initial contact!

When in doubt, ask for their name, badge number, and a number where your accountant or attorney can call them back.  Then hang up.  Do not give them any personal information whatsoever over the phone–do not confirm any personal information!  When in doubt about any collection proceedings from any tax authority, contact your tax professional.

Also, note that it is extremely rare (never to the best of my knowledge) for the IRS to use email when dealing with tax payers.

See the following Internal Revenue Service links below for more information:
https://www.irs.gov/newsroom/scam-phone-calls-continue-irs-identifies-five-easy-ways-to-spot-suspicious-calls
https://www.irs.gov/newsroom/phishing-schemes-lead-the-irs-dirty-dozen-list-of-tax-scams-for-2017-remain-tax-time-threat
https://www.irs.gov/privacy-disclosure/report-phishing

See the following California Franchise Tax Board links below for more information:
https://www.ftb.ca.gov/online/Fraud_Referral/index.shtml
https://origin-www.ftb.ca.gov/aboutFTB/press/2017/02-02172017.shtml
https://www.irs.gov/privacy-disclosure/report-phishing

IRS Annual Filing Season Program Credential

Posted on | by Steve M. Windham, LLM, MBA, EA

Recently, I was notified by the Internal Revenue Service that I qualified for the Annual Filing Season Program certification.  The only thing that I had to do was fill out an online application.  Since I am already an Enrolled Agent, this credential does not confer any additional benefits, but it does show that I am maintaining my continuing education requirements.

 

2017 Tax Software Survey

Posted on | by Steve M. Windham, LLM, MBA, EA

The Tax Adviser conducts an annual survey on tax software.  The link can be found here: http://www.thetaxadviser.com/issues/2017/aug/2017-tax-software-survey.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=01Aug2017

Personally, I have used four of these tax software packages, having used three of them for a significant amount of time.  These are: 1) Lacerte, 2) CCH Prosystem fx, 3) Drake, and 4) ProSeries.  My experience with ProSeries is very limited, so I have little to say about it.  Between Lacerte, CCH Prosystem fx, and Drake, each has its’ benefits and drawbacks.

Lacerte is very robust (there are only a handful of tax forms it does not handle), fairly easy to use, good customer support, and has many options that tax practitioners may find useful (such as printing out all of the input data in all of the input fields–something not found on all tax software).  The downside to Lacerte, and why I quit using it was the price.

CCH Prosystem fx is slightly more robust than Lacerte (it handles more of the international tax forms than Lacerte),  has good customer support, and it comes in a cloud-based version, CCH Global Prosystem fx.  The cloud-based version allows multiple users to access from anywhere in the world where there is a high-speed Internet connection.  The downside of CCH Prosystem fx is that it is cumbersome, glitchy, not very intuitive, and expensive.  Having worked with CCH Global Prosystem fx and CCH Prosystem fx for several years, I would not recommend it.

Drake is easy to use, inexpensive, and has great customer support.  There are drawbacks; it is not as robust as Lacerte or CCH Prosystem fx, and data input cannot be printed out the way it can be in Lacerte.  I switched to Drake from Lacerte for Windham Solutions in 2013, and I have no plans on going back to Lacerte.

IRS Can No Longer Charge User Fees For PTINs

Posted on | by Steve M. Windham, LLM, MBA, EA

The IRS recently lost a class action lawsuit on how they manage and charge for the Preparer Tax Identification Number (PTIN) program.  The IRS PTIN program was updated to include an annual renewal and annual renewal fees several years ago.  This was ostensibly to combat tax preparer fraud, yet the IRS was never quite able to articulate how it combated fraud and how much fraud it prevented.  The 2014 Loving case is a related case in which the IRS lost the ability to regulate tax preparers.

For more see:
https://www.accountingtoday.com/news/irs-loses-lawsuit-over-ptin-fees-suspends-ptin-system-and-and-may-be-forced-to-refund-preparers

https://www.forbes.com/sites/kellyphillipserb/2017/06/05/irs-loses-175-million-class-action-lawsuit/#201714341d02

http://www.ptinclassaction.com/

http://www.journalofaccountancy.com/news/2016/oct/ptin-class-action-lawsuit-201615343.html

 

IRS Loses Court Case to Regulate a Disbarred Attorney in Preparing Tax Returns and Offering Written Advice

Posted on | by Steve M. Windham, LLM, MBA, EA

The IRS Office of Professional Responsibility lost a court case against disbarred attorney, James Sexton, Jr. that tried to regulate Sexton’s preparation of tax returns and offering services of written advice.  The court issed a declatory judgment, rejecting the IRS Office of Professional Repsonsibility motion for summary judgment. Furthermore, the court issued a permanent injunction against the IRS Office of Professional Responsibility from pursing further enforcement against Sexton in this matter.  Sexton successfully argued that the Loving case applied to his situation because, as a disbarred attorney, the IRS Office of Professional Responsibility did not have jurisdiction over him.  He was not representing clients before the IRS because, as the Loving case determined some years earlier, preparing tax returns does not constitute practice before the IRS and the IRS cannot regulate those who do not practice before the IRS.

April 15th filing deadline for 2016 tax returns has been moved back to April 18, 2017.

Posted on | by Steve M. Windham, LLM, MBA, EA

FEDERAL TAX DEADLINE FOR FILING 2016 INDIVIDUAL TAX RETURNS HAS BEEN MOVED TO
TUESDAY, APRIL 18, 2017

April 15, 2017 falls on a Saturday which would normally push the IRS federal tax filing due date to Monday, April 17, 2017; however, because Monday, April 17, 2017 is Emancipation Day in the District of Columbia, the IRS federal tax filing deadline has been moved to Tuesday, April 18, 2017.

For more information, please visit:
https://www.irs.gov/uac/2017-tax-filing-season-begins-jan-23-for-nations-taxpayers-with-tax-returns-due-april-18