Hail Nexus Monday; startups using tax losses; advantages in the season’s choices; and other highlights from our favorite tax bloggers.
Whiffs of caution
- Tax Foundation (https://taxfoundation.org/blog): The Massachusetts November ballot will not include a proposal to increase income taxes for education and roads after the state’s highest court ruled that the measure violated anti-logrolling provisions in the state constitution. (It would have raised an additional $1.9 billion in revenue each year.)
- Bloomberg BNA (https://www.bna.com/news/#!topic=tax&type=blogpost&page=1): Florida’s Democratic gubernatorial candidate recently proposed an increase in the Florida corporate tax rate. Even if he’s elected, a constitutional amendment on the Sunshine State ballot this year could make it tough for the state to impose a higher corporate income tax.
- Avalara (https://www.avalara.com/us/en/blog.html): With a fitting moniker echoing Black Friday and Cyber Monday, Nexus Monday doesn’t promise basement prices for customers or record-breaking profits for sellers. In 10 states, it’s a day of reckoning for non-collecting retailers. And though nexus has made many states eager to take advantage, “There is also a whiff of caution in the air.”
- Houston Tax Attorney (http://www.irstaxtrouble.com/category/tax-blog/): Late nights, cold pizza for dinner, sleeping on the office couch: New businesses may not be immediately profitable. But giving up posh cruises? Using the tax losses (say, from a yacht) has ignited quite a few tax disputes.
- TaxProf (http://taxprof.typepad.com/taxprof_blog/): The 199A grants independent contractors and other pass-through taxpayers the ballyhooed potential 20 percent deduction. Critics argue that the deduction may cause a large-scale workplace shift in favor of independent contractor jobs, as workers seek to take the new deduction — surrendering, meanwhile, employee protections and benefits. One article investigates the factors that determine whether such a workplace shift is likely and, if it does, how it should be normatively evaluated.
- Dinesen Tax Times (http://dinesentax.com/blog): Every year (and we guess in keeping with the spirit of most filing seasons), the blogger has a few S corp clients who complain that they have a tax liability on their personal return. Typically there’s also a comment made about how “other people” they’ve talked to have S corps and “never pay anything in taxes.” The spirit, indeed.
- Taxjar (http://blog.taxjar.com/): In the ever-swirling world of state-by-state nexus, a new wave of localities kicked in this month.
- Don’t Mess With Taxes (http://dontmesswithtaxes.typepad.com/): This month brings not just ghosts and goblins and the first serious test of the football season, but also when many employees get to reassess and choose coming-year workplace benefits, many of which also offer tax advantages. How tax-free help paying off student debt could soon be part of those packages.
- Tax Girl (http://blogs.forbes.com/kellyphillipserb): The new per-diem travel numbers are now out for allowances paid to any employee on or after Oct. 1. The new rates include those for the transportation industry; the rate for the incidental expenses; and the rates and list of high-cost localities for purposes of the high-low substantiation method. Sounds complicated — but like so much concerning taxes these days, it is intended to keep things simple.
- Procedurally Taxing (http://procedurallytaxing.com): It’s time for the 10.6 million individuals with Affordable Care Act insurance to start thinking about 2019 open enrollment. “Unsurprisingly,” most people with 2018 plans subsidize premiums with the Advance Premium Tax Credit. A backgrounder on APTC reconciliation in the context of the Tax Court’s deficiency jurisdiction and a look at one circumstance in which taxpayers should be able to avoid APTC liability: fraudulent enrollment.
- The Income Tax School (http://www.theincometaxschool.com/blog/): Headline tax news this month reflects how close we’re getting to tax prep season. Key stories this month for preparers include the importance of claiming other dependents, beefed-up security for the individual tax transcript format and how 199A pass-through rules will add to compliance costs.
- Turbotax (https://blog.turbotax.intuit.com): Reform befuddled a heap of clients — not the least of whom are the self-employed. How the TCJA impacts those working for themselves (currently, some 55 million taxpayers).
- National Taxpayer Advocate (https://taxpayeradvocate.irs.gov/about/nta-blog): Further details about the IRS’s reliance on the accounts management customer service representative level of service as the benchmark to evaluate IRS phone service can mask the taxpayers’ struggles when seeking help.
- Rubin on Tax (http://rubinontax.floridatax.com): As With Many Things in Life Dept.: With $11.18 million of cover under the unified credit under the 2017 tax act, more estates than ever are exempt from federal estate tax. This is especially so for married individuals, who have double this amount and the benefits of portability to help make effective use of both spouses’ exemption amounts. Yet clients need to be reminded that this exemption amount is not permanent.
- Solutions for CPA Firm Leaders (http://ritakeller.com/blog/): There are approximately 46,000 CPA firms in the U.S.; the 500th largest firm has about 20 people and $3 million in revenue. Why and how some like to focus on smaller firms.
- Summing It Up (http://blog.freedmaxick.com/summing-it-up): Whoo-hoo for Homer Simpson and his accountant: Microbreweries often experiment with flavors and processes in ways that may qualify for a significant federal tax credit.
- Mauled Again (http://mauledagain.blogspot.com/): The blogger has long contended that user fees make more sense and are more efficient than using general tax revenues. Perhaps the most widespread user fee is the highway, bridge and tunnel toll — and just as people try to find ways to avoid general taxes (tell us about it), they also look for ways to avoid user fees, including tolls. How toll evasion seems to have taken creativity to a new level.
- Boyum Barenscheer (https://myboyum.com/blog/): A look at the new general business credit for employers who provide paid family and medical leave to their employees for 2018 and 2019.
- Federal Tax Crimes (http://federaltaxcrimes.blogspot.com/): In U.S. v. Marstellar, the court granted default judgment against Marstellar for FBAR non-willful penalties after a no-show by Marsteller. Likely a bad policy for a participant in any court….
- Tax Vox (http://www.taxpolicycenter.org/taxvox): While the House-passed plan to make permanent the individual tax cuts of the TCJA nets the most attention, what about a second bill as part of 2.0 plan that would, at least in part, have some chance to eventually become law? How the Family Savings Act of 2018 is a collection of 17 changes to tax-advantaged savings accounts, both narrow and notable.