Sep 292011
 
IRS Called Upon To Investigate Political Groups

Two campaign finance reform advocates have asked the IRS to investigate the special tax status claimed by four tax-exempt organizations that are expected to play a major role in influencing the 2012 elections.  The two watchdog groups: Democracy 21 and the Campaign Legal Center, are arguing that the four political groups: Crossroads Grassroots Policy Strategies, American Action Network, Priorities USA, and Americans Elect, should be required to register as political organizations, lose their tax-exempt status, and publicly disclose their donors.  Currently, all four organizations are established as 501(c)(4) entities. The laws surrounding 501(c)(4)s are convoluted.  According to the Treasury Regulations, More…

Sep 272011
 
IRS Launches Voluntary Compliance Settlement Program In An Effort To Resolve Past Worker Classification Issues

The IRS has recently announced the launch of its new Voluntary Compliance Settlement Program (VCSP); an effort to enable employers to resolve past worker classification issues by paying a reduced tax in exchange for reclassification of independent contractors as employees in the future.  According to IRS Commissioner Doug Shulman, “this settlement program provides certainty and relief to employers in an important area.  This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations.” The proper classification of a worker as either an independent contractor or employee is an More…

Sep 262011
 
Taxpayer Identity Theft On The Rise

Imagine filing your tax return and learning that someone else got your refund by using your name and Social Security number.  It seems that identity theft is on the rise everywhere these days, including the realm of personal income taxes.  The IRS is said to be grappling with a nearly five-fold increase in taxpayer identity theft between 2008 and 2010, identifying 470,000 cases of identity theft over the last three years. In Florida, U.S. Senator Bill Nelson recently unveiled legislation aimed at stopping criminals from filing fraudulent tax returns with stolen Social Security numbers.  At the same time, a task-force More…

Sep 152011
 
IRS Issues Guidance On Employer Provided Cell Phones

The IRS has recently issued Notice 2011-72 which provides guidance on the tax treatment of cell phones that employers provide to their employees primarily for business purposes.   Section 2043 of the Small Business Jobs Act of 2010, removed cell phones from the definition of listed property for taxable years beginning after December 31, 2009.  Many employers provide their employees with cell phones primarily for excludable business reasons and the value of the business use of an employer-provided cell phone is now generally excluded from an employee’s income. An employer will be considered to have provided an employee with a cell More…

Sep 142011
 
Florida Documentary Stamp Tax And Transfers To LLCs

In Florida, documentary stamp tax is generally levied at the rate of $.70 per $100 (or portion thereof) on documents that transfer an interest in real property, such as warranty deeds, quit-claim deeds, easements, and deeds in lieu of foreclosure.  An exception is Miami-Dade County, where the rate is $.60 per $100 (or portion thereof) when the property is a single-family residence.  The tax is calculated based on the amount of consideration that passes between the buyer and the seller, which may include the amount of a mortgage on the property. In an effort to avoid paying these taxes, individuals More…

Sep 132011
 
The Difference Between Nonprofit And Tax-Exempt Status

Many times we come across individuals who feel that a “nonprofit” and “tax-exempt” entity are the same thing.  However, this is not the case and there is an important distinction between the two concepts. Nonprofit status is a state law concept.  Nonprofit status may make an organization eligible for certain benefits, such as state sales, property and income tax exemptions.  In Florida, certain not-for-profit organizations are exempt from sales and use tax on purchases and rentals of tangible personal property if that property is used in carrying out the organization’s not-for-profit activities.  An entity looking to receive an exemption from More…

Sep 122011
 
Sale Of A Single Member LLC Presents Special Issues For Buyer And Seller

Generally, unless a single-member LLC elects to be treated as a corporation it will be considered a disregarded entity under the IRS check-the-box regulations.  Since the entity is disregarded, its assets, liabilities and operations are considered owned directly by the sole member. Thus, if the buyer purchases only the membership interest in an LLC and not the LLC’s individual assets under state law, federal tax law treats the acquisition of that interest as a direct purchase of the LLC assets. Consequently, a sale of the membership interest under state law will be considered a direct sale of the LLC assets More…

Sep 082011
 
IRS Debt Settlement: Offer In Compromise

If an individual has a sizable tax debt, minimum assets and income prospects, and can fulfill the right circumstances, the IRS may accept an Offer in Compromise (OIC) to settle unpaid tax accounts for less than the full balance due. This applies to all taxes, including any interest, penalties, or other additional amounts arising under the Internal Revenue laws. The OIC program is an option only for those taxpayers who are unable to pay their tax account in a lump sum or through an installment agreement and have exhausted their search for other payment arrangements.  The IRS may legally compromise More…