Snellman, TC Summary Opinion 2014-10TC Summary Opinion 2014-10
A victory in some areas, but it shows that documentation is still key. See my blog at http://www.davidapope.com/1/post/2013/09/control.html .
Snellman, TC Summary Opinion 2014-10TC Summary Opinion 2014-10 According to the above tax court summary opinion, a taxpayer's six-month out-of-town work assignment was temporary in nature and his "tax home" didn't shift to the temporary location. Therefore, he was entitled to deduct the associated travel, lodging, meal and incidental expenses. The courts did, however allow the IRS to reduce a portion of the taxpayer's expenses because he failed to keep accurate and contemporaneous records of his expenses.
A victory in some areas, but it shows that documentation is still key. See my blog at http://www.davidapope.com/1/post/2013/09/control.html . The is wonderful news for baby boomers who are beginning the process of selling their S-Corporation shares to their employees.
As of December 31, 2013, each of the following tax provisions have expired. Knowing our congress, though, each may be back retroactively! I will keep you updated. The following information is from the Congressional Research Service:
CRS Report for Congress entitled "Tax Provisions Expiring in 2013 ("Tax Extenders")," RL43124 " Tax extenders" defined. The Code presently contains dozens of temporary taxprovisions. In the past, legislation to extend some set of these expiringprovisions has been referred to by some as the "tax extender" package. While there is no formal definition of a "tax extender," the term has regularly been used to refer to the package of expiringtaxprovisions temporarily extended by Congress. These expiringprovisions often are temporarily extended for short periods of time (e.g., one or two years). Obama administration and Congressional comments regarding the extenders. The report notes that both the Obama Administration's FY2014 budget and House Ways and Means Committee chairman Dave Camp have commented to the effect that extenders should be looked at as part of broad tax reform. List of extenders due to lapse at end of 2013. Here are the more significant 2013 tax extenders: Individual provisions. ... deduction for state and local sales taxes; ... above-the-line deduction for certain expenses of teachers; ... deduction for mortgage insurance premiums deductible as qualified interest; ... parity for exclusion for employer-provided mass transit and parking benefits; ... exclusion of discharge of principal residence indebtedness from gross income; ... credit for health insurance costs.
Business provisions. ... research and experimentation credit; ... work opportunity credit; ... increase in expensing to $500,000 / $2,000,000 and expanded definition of Section 179 property; ... bonus depreciation; ... exceptions under Subpart F for active financing income; ... look-through treatment of payments between controlled foreign corporations; ... special treatment of certain dividends of Regulated Investment Companies; ... employer wage credit for activated military reservists; ... special expensing rules for film and television production; ... special rules for qualified small business stock; ... reduction in S corporation recognition period for built-in gains tax; ... election to accelerate alternative minimum tax (AMT) credits in lieu of additional first-year depreciation; ... low-income housing credit rate; ... treatment of military basic housing allowances under low-income housing credit; ... 15-year straight line cost recovery for qualified leasehold, restaurant, and retail improvements; ... deduction allowable with respect to income attributable to domestic production activities in Puerto Rico; ... modification of tax treatment of certain payments to controlling exempt organizations; ... accelerated depreciation for business property on Indian reservations; ... Indian employment credit.
Charitable provisions. ... enhanced charitable deduction for contributions of food inventory; ... tax-free distributions from Individual Retirement Accounts (IRAs) for charitable purposes; ... basis adjustment to stock of S corporations making charitable contributions of property; ... special rules for contributions of capital gain real property for conservation purposes.
Energy provisions. ... credit for construction of energy efficient new homes; ... energy efficient commercial building deduction; ... credit for energy efficient appliances; ... credit for nonbusiness energy property; ... alternative fuel vehicle refueling property; ... incentives for alternative fuel and alternative fuel mixtures; ... incentives for biodiesel and renewable diesel; ... placed-in-service date for partial expensing of certain refinery property; ... credit for electric drive motorcycles and three-wheeled vehicles.
Community assistance provisions. ... qualified zone academy bonds - allocation of bond limitation; ... new markets tax credit; ... American Samoa economic development credit; ... empowerment zone tax incentives. Wyoming Rated Best Tax Climate - Again11/17/2013
The Tax Foundation, a nonpartisan tax research group, named Wyoming as the state with the best tax climate in it's 2014 study of nationwide tax policy. New York was rated worst. The study, which utilizes more than 100 variables and criteria, enables business leaders, potential businesses and policy makers to compare their states to others. South Dakota, Nevada, Alaska and Florida round out the top five, while the bottom five are made up of Rhode Island, Minnesota, California, New Jersey and New York. The other state of regional interest to my clients is Colorado, who ranked 19th on the list. For more information or to see the entire list, go to www.taxfoundation.org Judge Finds that Instant Tax Service Franchisor Defrauded Customers, Obstructed the IRS and Violated Court Orders on Lending Practices From a press release by the U.S. Department of Justice:
A federal court has entered a permanent injunction ordering ITS Financial LLC, the parent company of the Instant Tax Service franchise, to cease operating, the Justice Department announced today. The injunction order, which was signed yesterday by Judge Timothy S. Black of the U.S. District Court for the Southern District of Ohio, also bars Fesum Ogbazion, the sole owner and CEO of ITS Financial, from operating or being involved with any business relating to tax-return preparation. The court issued the order following a two-week trial in Cincinnati in June 2013. Instant Tax Service, which is based in Dayton, Ohio, claimed to be the fourth-largest tax-preparation firm in the nation. According to the court, ITS Financial had about 150 franchisees that filed over 100,000 tax returns each year in 2011 and 2012. Two other entities owned by Ogbazion, Tax Tree LLC and TCA Financial LLC, were also defendants in the case and were also ordered to cease operating. The court found that Ogbazion and his defendant companies had: · Filed tax returns for customers without their permission and encouraged franchisees to do the same; · Clandestinely trained and encouraged franchisees to prepare and file tax returns prematurely with paycheck stubs that omitted and understated income and inevitably resulted in the submission of false federal tax returns; · Defrauded customers, who were largely low-income, by marketing false and fraudulent loan products to lure them into the tax-preparation offices; · Defrauded customers by requiring franchisees to charge phony and exorbitant fees; · Forged customers’ signatures on loan checks and used those forged checks to operate Ogbazion’s businesses; · Willfully failed to pay over $1 million of their own employment taxes and lied about assets in connection with the collection of those taxes, while hiding money in a secret bank account and defrauding the United States and third party creditors; · Lied on government forms and encouraged franchisees to do the same; · Obstructed government agents and materially assisted franchisees in circumventing Internal Revenue Service (IRS) law-enforcement efforts involving the suspension of electronic filing identification numbers; and · Told franchisees to lie to government agents in connection with IRS compliance visits. The court credited an IRS study concluding that the tax harm caused by Instant Tax Service franchisees in five cities in a single tax-filing season was between $10 million and $25 million. “Defendants’ harm to the public is extensive and egregious, indeed appalling,” the court stated. “This is especially so given the nature of Instant Tax Service’s core customer – the working poor – who are particularly vulnerable to [the] Defendants’ fraudulent practices.” The court further stated: “Defendants’ repeated attempts at trial and in argument to downplay the gravity of their lawlessness was stunning. The court concludes that even today [the] Defendants have not fully recognized their culpability. Ultimately, the nature, scope and gravity of [the] Defendants’ offenses, and the unrepentant attitude toward their commission, demonstrate the necessity for a complete injunction putting the Defendants permanently out of business.” The court also concluded that Ogbazion and ITS Financial violated the terms of a preliminary injunction order that the court had entered in October 2012 with their consent. The court found that, despite their agreement to obey various lending and consumer-protection laws during the 2013 tax filing season, they violated several of those laws by discriminating against active-duty military personnel on loan applications and by failing to obtain a state lending license in a timely manner. The court determined that they violated the preliminary injunction by causing their franchisees to provide tens of thousands of customers with Truth-in-Lending Act disclosure forms falsely stating that the loans carried no finance charges and an annual percentage rate (APR) of zero. “We are gratified by the court’s decision, which serves to protect hard-working taxpayers who were targeted by Instant Tax Service, and also safeguards all honest taxpayers from the harm done by fraudulent tax filings,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division. “As described by the court, this company grew large through abhorrent means – filing returns without customer authorization, forging customer signatures, pushing fraudulent loan products, and much more. As the court’s decision recognizes, a business model based on false and fraudulent conduct cannot be allowed to prevail.” “The court's decision sends a clear message to those who might be tempted to abuse the public trust provided to the tax preparer community,” said Acting IRS Commissioner Danny Werfel. “Those who deceive their customers and defraud the U.S. Treasury will face swift legal action that puts an end to their corrosive conduct." Assistant Attorney General Keneally thanked former and current Tax Division trial attorneys Nathan Clukey, Sean Green, Russell Edelstein, Jose Olivera and Gregory Van Hoey, along with paralegal Mahana Karimi, for their efforts on the case. She also thanked the many IRS attorneys and agents who participated in the investigation. Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2013 . The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional . In the past decade, the department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the departmentwebsite . In Memory of Jean Cotton, DVM11/7/2013
It is with great sadness that I report the passing last week of one of DAPCPA's most tenured and beloved clients. Jean Cotton, DVM had been a client of the firm's since 1997 and was greatly loved and respected by all of us. She was 72 when she passed. I met Jean and her daughters Katy and Ruth in 1994 when I was with my previous firm. Having just moved to Cheyenne, we had a need for a good veterinarian for our cat (M&M) and our Labrador (Musket). Dr. Cotton was referred to us by my employer and became a fast friend to us and our animals. Jean became a client after I opened my own firm and we had many wonderful conversations throughout our time together. She was as strong, proud and conservative as Wyoming itself. She was an intense advocate for her daughters and every animal that walked (or was carried) into her clinic. My most poignant memory is when she took a trip to our office just to watch our labrador sleep. Musket was elderly by then, yet Missy and I couldn't make THE decision. Musket was an angel of a dog who had been a member of our family for many years. She was Missy and I's first dog together. Musket was becoming paralyzed in her lower back and we didn't know whether she was in pain or not. Jean watched Musket sleep and noted things that I didn't - things that indicated Musket was in pretty constant pain, but was hiding it while awake. Jean took Missy's hand, looked into her eyes and said "It's time". Then she held Missy while she cried. Jean was/is amazing. She and her daughters will always have my gratitude for their friendship and their business. I pray for their comfort in their time of sorrow and I pray that Musket and Twinkie met Jean at the gates of heaven and the they are all enjoying each other again. On Friday, the IRS announced that the Social Security wage base for 2014 would oncrease to $117,000. After an employee reaches this thresholdeach year, the additional tax is no longer applied. This means that this year's maximum amount of Social Security tax paid by an employee will be $7,254, in conjunction with the employer's match of $7,254 - for a total of $14,508. Supreme Court Hears Partnership Penalty Case10/28/2013
In a rare hearing of a tax case, the United States Supreme Court is weighing arguments in United States V. Woods, which involves Texas billionaire "Red" McCombs and his business partner Gary Woods.
Woods and McCombs created a tax-shelter partnership 14 years ago that, after an audit, was found to be a tax sham. The IRS then applied a 40% penalty to the partners as a pass-through from the partnership. Woods and McCombs fought the application of the penalty in court, winning at the district court level and in appeals. The Supreme Court subsequently decided to take up the issue and heard arguments last Wednesday. The issue is whether a partnership structure can shield the partners from tax liabilities or penalties generated by the partnership. IRS Announces Filing Season Delay10/26/2013
The IRS Announced Tuesday that the filing season will be delayed up to two weeks because of the 16 day government shutdown. the additional time will allow for additional testing of the systems as well the programming of any last-minute changes to the tax code that often happen at year end. Originally expected to start on January 21, 2014, the IRS is targeting January 28th to begin accepting e-filed returns, with the delay expecting to last no later than February 8th. New Per-Diem Rates For 2013-201410/11/2013
The IRS recently released the per-diem travel rates for use in the remainder of 2013 and for the first four months of 2014.
For purposes of the high-low substantiation method, the per diem rates in lieu of actual substantiation by receipt are $251 for travel to any high-cost locality and $170 for travel to any other locality within the continental United States. The amount of the $251 high rate and $170 low rate that is treated as paid for meals for purposes of § 274(n) is $65 for travel to any high-cost locality and $52 for travel to any other locality. Please let us know if you have any questions or would like our assistance in planning for these changes. DP (info@dapcpa.org) |
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