Tuesday, November 14, 2017

Does Haste Make Waste?

        One word that can be used to describe the current efforts in Tax Reform is: speed. There are major changes to the current Federal Tax plan that are being proposed, and if passed, they will go into effect in less than 5 years. But what will happen when they do? Since the different plans are still being debated, nobody can say for sure. However, there are many possibilities that are of concern because they can lead to very big loopholes. 
 
       For example, there is a provision to change the Corporate Tax System in the US. Currently, all Corporate profits for US companies are taxed, no matter where in the world they are earned. This has led some companies to keep their overseas profits from coming back to the US, by any number of complicated schemes. The change would be a switch that only taxes profits earned in this country. On the surface, this might give more incentive for a business to transfer money to an overseas parent. However, if a company that makes over $100 Million were to try this, they could be subject to a 20% Tax under this rule. These seem to be good answers to troublesome Tax issues that have been going on for years.
 
          Before these reform plans even get close to being applied, loopholes have already been pointed out. There are still tax shelters in low tax countries that can be used through skillful manipulation. There is also the possibility that Corporations could move production and research facilities to other countries to get around that 20% tax. While, the process of changing the Tax Code is ongoing, perhaps being through and detailed in this work should be the focus.

Thursday, October 26, 2017

A Tax Requirement, Now Being Enforced


          It has now been made official. The IRS will NOT accept Federal Tax Returns that do not answer the questions about health coverage under the Affordable Care Act. This change in policy will go into effect next year, for the upcoming Tax Season. This is a significant move on the part of the IRS.
          In the past, this requirement had been something of a gray area. Due to a variety of factors, the IRS has been processing Tax Returns where individuals have not shown that they have health coverage. However, they would still apply a penalty to these Taxpayers. Even so, in these situations a Tax Refund would still be issued, a little later than most. That will no longer be the case. As it stands, the ACA is still in place, and the IRS will apply its obligations under the law to all Taxpayers. Even if it means suspending or rejecting the processing of a Tax Return until it gets an answer. Be sure to ask your Qualified Tax Professional what this means for you.

Thursday, October 5, 2017

The Extension Deadline is Here!


          Every year, there are many Taxpayers who ask for a 6-month extension to file their Federal Tax Return. This year, that deadline is fast approaching on October 16. For those who are filing a Tax Return this month, here are a few points to keep in mind.
          It may seem to be very obvious, but make sure your Tax Return is filed on time. If one files late, after being given an extension, there are penalties and fines that will result. These can be avoided by simply filing on time. For those who know that they will owe, they should pay as much as possible to avoid more penalties and interest. A Qualified Tax Professional can help you to see how much you will owe and go over your payment options. Those who have an extension, and have been effected by disasters like earthquakes and hurricanes, will normally have more time to file.
          When filing, it is considered wise to keep the Tax Return and supporting documents for at least 3 years. In the event of any IRS inquiry, providing documentation that they normally ask for will be relatively simple. This will also simplify the task of filing the Tax Return for following year. As always, keep your sensitive personal information in a safe place.

Friday, September 29, 2017

Keeping Up With the Speed of Change 4


          It seems today, that the only constant that we can rely on is change. Whether that is true or not, there are many things that we do need to be aware of, and adjust to. There are waves of change that hit us whether we like it or not. It’s at those times, that we may be best served, by taking a step back and reflecting on time tested advice that can give appropriate perspective.
          “Never stop learning”. Considering how fast technology changes, and its effects on the world continue to be felt in different ways, all of us are learning many things at the same time. It allows us to better meet demands and provide much needed services, especially in the area of tax and finance. While this can be intimidating, it must be embraced. The future will not wait, and there are unknown benefits that await those who adapt to changing times.
          “Start with the small things”. This is a basic way to create a strong foundation for any endeavor in life, but especially in the area of finance. When a Qualified Tax Professional gets the small things right, then trust is gained. If not, then the opposite is true. Paying attention to detail and having determination, will make that trust a reality. There is no dollar amount that can be put on that. Then the bigger goals can be reached. This is what you can expect at Sykes Accounting.

Tuesday, September 19, 2017

Can the Tax Code Become Simple?


          Most people would prefer simple tasks and activities over anything complex. Is the same true of taxes and finance? Most would give a resounding “Yes!” to that question. However, it has been said that over the past 30 years, that Federal Tax law has grown from 26,000 pages to 70,000 pages. Why has this taken place?

          One theory is that the Tax code is stuck in what can be called the “Rinse. Wash. Repeat.” cycle. In this situation, a law is passed, but Taxpayers and professionals do their best to comply with the law while paying as little in tax as possible. When this is observed, Congress will pass another law to prevent these tactics, and the process starts again. It highlights how complicated things can get when many different groups are trying to represent their own interests, including the US government. Perhaps a balance can be reached, but it will be difficult to say the least.

Friday, September 15, 2017

How to Know if it's the IRS - Part 2


          This is the time when the IRS will increase its notices to many Taxpayers about different matters. Unfortunately, this means that there are many others who try to take advantage and defraud others by pretending to representatives of the US Treasury. So it’s up to each of us to know what will distinguish a genuine officer or agent from a con artist.
          The In-Person visit. These can happen for various reasons, and from different branches of the IRS. No matter what the case may be, IRS representatives will always have a pocket commission and Personal Identity Verification Credential. They will describe the authority and responsibilities of the person to whom they belong. A Revenue Officer often makes visits to discuss Tax debt. These visits are usually not scheduled. They can request payment, but it will always be to the US Treasury. A Revenue Agent of the IRS handles audits, and will schedule time with a Taxpayer or Qualified Tax Professional to do so. At times, they can make unscheduled visits to discuss matters.
          Those who make up the Criminal Investigative branch of the IRS are Federal Law enforcement agents. They will carry a badge and law enforcement credentials. When dealing with them, they will never request any sort of payment. They will often arrive at a business or a home unannounced while conducting an investigation. It is a crime to lie to them, but you may choose to not speak with IRS Special Agents without an attorney present. No matter which part of the IRS you may have dealings with, you can be informed and know what rights you have. A Qualified Tax Professional can guide you along the way, and perhaps help you to avoid these situations.

Wednesday, September 6, 2017

How to Know if it's the IRS - Part 1


          Now is especially the time of year when the IRS will contact Taxpayers about different financial issues. There are standard practices that will be followed, so one will know that they are actually dealing with the IRS. This 2 part series is meant to serve as a cautionary reminder of the times we live in, and show how we can keep our most sensitive financial information safe.
          Phone Calls. The first contact from the IRS will usually be in the form of a letter in the mail. They will never send text messages or use social media. An IRS Agent or Revenue Officer may call a Taxpayer or the Tax Professional to confirm an appointment or items for an audit. In some cases, a private debt collection firm can be used for outstanding tax amounts. However, this will only be done after written notice has been given. Any and all payments will always be to the US Treasury.
          The IRS and its contractors will never ask for payment over the phone. They will never insult or threaten a Taxpayer with a lawsuit, deportation, or something similar for not making a payment. A Taxpayer always has the right to question or appeal the amount given, just like they have the right to a Tax Representative. Our next post will focus on how to know if it’s the IRS when being visited in person.