Jul 262012
 
2012 Florida Sales Tax Holiday Is August 3-5

Next week, Florida will host its annual Sales Tax Holiday.  This year’s holiday runs August 3-5, allowing consumers statewide to purchase clothing, footwear and certain accessories selling for $75 or less, and certain school supplies for $15 or less per item, with no sales tax or local option tax, according to the Florida Department of Revenue website.  Florida’s general sales tax rate is 6 percent.  The tax exemption applies no matter how many items a consumer buys in one transaction. Consumers will be able to purchase the following items with no sales tax or local option tax (discretionary sales surtax), More…

Jul 252012
 

The IRS is continuing to go after taxpayers who attempt to use S corporations to avoid payroll taxes.  Generally speaking, a wage-earning taxpayer is subject to a variety of payroll taxes, which can include income, Social Security, Medicare, and unemployment taxes.   Sometimes, business owners reach the conclusion that they can pay themselves very little in terms of salary and then call the rest of the company’s earnings a distribution, in order to escape payroll taxes. The problem with this strategy is that the IRS will aggressively pursue taxpayers whom they feel are paying themselves an “unreasonably” low salary in an More…

Jul 232012
 
Bizarre IRS Estate Tax Decision Leads To $29 Million Tax Bill

A dispute with the IRS over the estate of a modern art dealer has taken a strange turn along the way to a $29 million dollar estate tax deficiency.  The controversy centers over a piece of art created by Robert Rauschenberg known as “Canyon.”  This particular piece incorporates a stuffed bald eagle, a federally protected species, which means that under federal law anyone who tries to sell the piece would be committing a crime.  Therefore, estate appraisers thought that they were justified in valuing the piece at $0 for estate tax purposes.  Unfortunately, the IRS disagreed, and determined that the More…

Jul 202012
 
Tax Court Decision Upholds Annual Exclusion Treatment For Gifts Of Family Limited Partnership Interests

A recent U.S. Tax Court decision has established the parameters for qualifying gifts of an interest in a family limited partnership as annual exclusion transfers.  Under § 2503 of the Internal Revenue Code, a person may gift away up to $13,000 each year per individual without suffering any gift tax consequences.  This is commonly referred to as the “annual exclusion.”  In order to be considered a transfer that is eligible for the annual exclusion, the gift has to be of a “present interest,” and not just an interest in a future right or benefit.  Courts have held that in order More…

Jul 162012
 

Assuming that the new healthcare law survives this year’s election in the current form, the new Medicare tax found within its provisions will likely complicate the tax consequences that stem from the sale of certain business interests.  Beginning in 2013, Section 1411 of the Internal Revenue Code will impose a new Medicare tax equal to 3.8% on the “net investment income” of U.S. individuals, estates and trusts.  Section 1411(c)(4) applies a “deemed asset sale” approach to the disposition of a partnership or S corporation interest in order to determine the amount of net investment income which arises from the transaction. More…

Jul 132012
 
IRS Details Special Tax Benefits For Armed Forces

It is no secret that military personnel and their families face unique life challenges with their duties, expenses and transitions.  The IRS has announced that it wants active members of the U.S. Armed Forces to be aware of all of the special tax benefits which are available to them. Moving Expenses – If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you may be able to deduct some of your unreimbursed moving expenses. Combat Pay – If you serve in a combat zone as an enlisted person More…

Jul 112012
 
Questions Abound Regarding IRS’ Ability To Enforce Healthcare Law

Now that the U.S. Supreme Court has ruled affirmatively on the new healthcare law and its most controversial measure, the individual mandate, the IRS must prepare to enforce the new legislation while still maintaining its customary obligation of collecting the taxes necessary to run the federal government.  Some have called into question if the problem-stricken agency can handle this new obligation, as well as whether the IRS has maintained adequate transparency in preparing for the role. As the IRS seeks funding to build a system to oversee the healthcare mandate, Republicans suspect the agency is already diverting resources away from More…

Jul 062012
 
Taxpayer Advocate Service Report Highlights Growing Problem Of Taxpayer Identity Theft

In our last post, we discussed the release of the National Taxpayer Advocate’s 2013 Objectives Report To Congress and the material therein which addressed the issue of the IRS’ increasing use of automation when dealing with taxpayers.  The report also details the growing concern of taxpayer identity theft, something we have previously discussed on numerous occasions. According to the report, “[i]dentity theft wreaks havoc on our tax system in many ways.  Victims of identity theft not only must deal with the aftermath of an emotionally draining crime, but may also have to deal with the IRS for years to untangle More…

Jul 052012
 
National Taxpayer Advocate Admonishes IRS For Increasing Use Of Automation When Dealing With Taxpayers

The Taxpayer Advocate Service has released its 2013 Objectives Report To Congress and in the document it takes the IRS to task for “increasing using automation to distance itself from communicating personally with taxpayers.”  The report states that the IRS has increasingly turned to automated procedures to assess tax liabilities in the face of “growing responsibilities and shrinking examination resources.”  These procedures are often used for technically non-audit programs such as the automated substitute for return (ASFR) program, automated underreporter (AUR) program, math error adjustments, automated questionable credit or refund (AQC) program, and correspondence examinations.  The report states that in More…

Jul 022012
 
New Taxes In The Healthcare Law

Now that the United States Supreme Court has ruled on the constitutionality of the Patient Protection and Affordable Care Act (“PPACA”), President Obama’s signature healthcare legislation, we will all have to become more familiar with the taxing provisions contained within the bill.  Beyond the individual mandate, which now has the dubious distinction of being perhaps the most famous “tax” imposed by the PPACA, there are numerous other revenue-raising provisions found within the law’s hundreds of pages of statutes, rules, and regulations. The vast majority of the PPACA’s revenue raising potential will come from just a few of the many tax More…