Tax Inflation Adjustments 2024

New for 2024

Starting in calendar year 2023, the Inflation Reduction Act reinstates the Hazardous Substance Superfund financing rate for crude oil received at U.S. refineries, and petroleum products that entered into the United States for consumption, use, or warehousing. The tax rate is the sum of the Hazardous Substance Superfund rate and the Oil Spill Liability Trust Fund financing rate. For calendar years beginning in 2024, the Hazardous Substance Superfund financing rate is adjusted for inflation. For calendar year 2024 crude oil or petroleum products entered after

Dec. 31, 2016, will have a tax rate of $0.26 cents a barrel.

Highlights of changes in Revenue Procedure 2023-34:

The tax year 2024 adjustments described below generally apply to income tax returns filed in 2025. The tax items for tax year 2024 of greatest interest to most taxpayers include the following dollar amounts:

• The standard deduction for married couples filing jointly for tax year 2024 rises to $29,200, an increase of $1,500 from tax year 2023. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
   
• Marginal rates: For tax year 2024, the top tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly).

  The other rates are:

  35% for incomes over $243,725 ($487,450 for married couples filing jointly)
  32% for incomes over $191,950 ($383,900 for married couples filing jointly)
  24% for incomes over $100,525 ($201,050 for married couples filing jointly)
  22% for incomes over $47,150 ($94,300 for married couples filing jointly)
  12% for incomes over $11,600 ($23,200 for married couples filing jointly)

  The lowest rate is 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly).
   

• The Alternative Minimum Tax exemption amount for tax year 2024 is $85,700 and begins to phase out at $609,350 ($133,300 for married couples filing jointly for whom the exemption begins to phase out at $1,218,700). For comparison, the 2023 exemption amount was $81,300 and began to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption began to phase out at $1,156,300).
   
• The tax year 2024 maximum Earned Income Tax Credit amount is $7,830 for qualifying taxpayers who have three or more qualifying children, an increase of from $7,430 for tax year 2023. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
   
• For tax year 2024, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $315, an increase of $15 from the limit for 2023.
   
• For the taxable years beginning in 2024, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,200. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $640, an increase of $30 from taxable years beginning in 2023.
   
• For tax year 2024, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,800, an increase of $150 from tax year 2023, but not more than $4,150, an increase of $200 from tax year 2023. For self-only coverage, the maximum out-of-pocket expense amount is $5,550, an increase of $250 from 2023. For tax year 2024, for family coverage, the annual deductible is not less than $5,550, an increase of $200 from tax year 2023; however, the deductible cannot be more than $8,350, an increase of $450 versus the limit for tax year 2023. For family coverage, the out-of-pocket expense limit is $10,200 for tax year 2024, an increase of $550 from tax year 2023.
   
• For tax year 2024, the foreign earned income exclusion is $126,500, increased from $120,000 for tax year 2023.
   
• Estates of decedents who die during 2024 have a basic exclusion amount of $13,610,000, increased from $12,920,000 for estates of decedents who died in 2023.
   
• The annual exclusion for gifts increases to $18,000 for calendar year 2024, increased from $17,000 for calendar year 2023.
   
• The maximum credit allowed for adoptions for tax year 2024 is the amount of qualified adoption expenses up to $16,810, increased from $15,950 for 2023.

Items unaffected by indexing

By statute, certain items that were indexed for inflation in the past are currently not adjusted.

• The personal exemption for tax year 2024 remains at 0, as it was for 2023. This elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
   
• For 2024, as in 2023, 2022, 2021, 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
   
• The modified adjusted gross income amount used by taxpayers to determine the reduction in the Lifetime Learning Credit provided in § 25A(d)(2) is not adjusted for inflation for taxable years beginning after Dec. 31, 2020. The Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000 ($160,000 for joint returns).

Selling Your Principal Residence - Come on, man!

When you sell your home, you may incur a taxable gain: one in excess of the exclusion available ($250K, and $500K).  In the year you sell, don't wait around until the 10th of the following April during the busy tax season to call your tax preparer and inquire as to what he or she needs to figure your gain.  In many cases, it also makes sense to complete this task immediately and early on in the year of the sale if it occurs before March 31st because the tax preparer may need the sale information to discuss its impact on the need for estimated taxes that may become due as a result. 

To do this, take a few minutes or longer to compile a list of the 'improvements and betterments" made to the property during the time you owned it. These amounts are not to be confused with "simple repairs" which generally speaking aren't to be considered.  Supply this list along with the original cost to purchase it and the date it was purchased.  Make sure the preparer is aware of the length of time it was owned and the length of time it was occupied as your principal home. 

Make sure your tax preparer is provided a copy of the two-page closing document when the home was sold so that he or she can properly pick up the closing costs, credits, and the selling price that was reported to the IRS.  I personally believe in forcing this information to be included in a return because  the only sale information the IRS sees without it is the selling price. Ouch!!!   

Also remember to supply him or her with the costs you incurred to get the house ready to sell.  These costs as often separated from those costs you list in the historical summary.   

 

Meals and Entertaiment - Tax Deductions for 2022 (so far)

Here's a useful table that recaps the type of meal and/or entertainment expense covered and to what extent it is tax deductible in 2022:

Type of Expense	Deduction
Entertaining clients (concert tickets, golf games, etc.)	0% deductible
Business meals with clients	50% deductible (100% if purchased from a restaurant)
Office snacks and meals	50% deductible (100% if purchased from a restaurant)
Company-wide party	100% deductible
Meals & entertainment (included in employee compensation)	100% deductible

Getting Paid Venmo Paypal from Ken Berry and the CPA Practice Adviser

If your small business receives payments from Venmo, PayPal or other third-party network, you could be in for a rude surprise next year. Under a little-publicized provision in the American Rescue Plan Act (ARPA), providers must begin reporting to the IRS business transactions totaling $600 or more, just like most employers. This could create some unexpected hassles for entrepreneurs who use one or more of these apps to conduct business. The ARPA change takes effect on January 1, 2022.

Previously, third-party providers faced less-daunting challenges. They only had to send out 1099-K forms when an account had 200 or more business transactions during the year totaling at least $20,000. The new ARPA reporting requirement broadens the application significantly.

Of course, this rule change doesn’t change the tax consequences for recipients. If you receive payment for business services or goods that you furnish, you were already liable for federal income tax on that amount regardless of whether you’re paid in cash or by check, credit card, app or some other means. On the flip side, you’re certainly entitled to claim deductions for your qualified business expenses that can offset the tax that you may owe.

ARPA aims to clamp down on business-people, particularly those operating in the gig economy like Uber and Lyft drivers and airbnb landlords, who haven’t been reporting all of their taxable business income. But rest assured it doesn’t affect casual and personal transactions made through one of the third-party networks. For example, if you’re being reimbursed by friends for the tab at a restaurant or for tickets to a sporting event or concert, you’re in the clear. This won’t result in any taxable income.

Nevertheless, the new reporting requirement could lead to some tax complications.

Notably, the third-party network may not be sure if a transaction is personal or for business. If it issues a 1099 to you for a charge in a gray area, it’s up to you to prove tat this isn’t a taxable event if the IRS imposes tax.

What’s more, you might, and probably will, receive some duplicate 1099s for the same goods or services. This could occur, for example, if you get a 1009-MISC or 1099-NEC from a customer or client and a 1099_K from the third-party provider. Again, the onus is on you to establish the existence of just one business transaction for the event.

What can you do about it? Not a whole lot for now. Expect Venmo, PayPal and the other the third-party networks to start asking for more information to clarify the nature of your transactions. (BTW: PayPal now owns Venmo.) And they will be requesting your vitals— such as an Employer Identification Number (EIN), Individual Tax ID Number (ITIN) or Social Security Number (SSN)—that they will be sharing with the IRS.

One possible solution is to use separate accounts:earmarked for business and personal transactions. That will give you more credibility if the IRS ever comes calling. Bottom line: many Venmo and PayPal users won’t be flying under the radar any longer.

Contact your adviser.

Build Back Better Acct Proposed tax Law Changes

From CCH....

Congress and the Biden Administration are locked in ongoing negotiations over the budget reconciliation bill, the Build Back Better Act (BBBA), which, if enacted in its present form, would significantly impact planning for estates and high-net worth individuals. The final form and effective dates of these proposals are subject to change as the proposal makes its way through Congress and provisions and effective dates are altered to gain legislative approval or to achieve revenue goals.Proposed Corporate Rate Changes

Among the highlights of the proposal is change in the income tax rate applicable to corporations, with a shift back towards graduated rates. Currently, a 21 percent flat rate applies to corporations, regardless of income amounts. Under the proposal, the rate would increase to 26.5 percent on corporate income in excess of $5,000,000. Income between $400,000 and $5,000,000 would retain a 21 percent tax rate, while income below $400,000 would be taxed at 18 percent. A three percent surcharge would apply to incomes in excess of $10,000,000, up to surcharge tax of $287,000.

Proposed Individual Rate Changes

As long promised by Democratic lawmakers, as well as President Biden during his campaign, individuals would also see tax increases under the proposal.  But only those making in excess of $400,000 a year would see a change.  Under the proposal, the current 37 percent rate bracket would be increased to 39.6 percent (the top rate in effect prior to the Tax Cuts and Jobs Act), and would be expanded to begin at $400,000 (in the case of unmarried taxpayers). Currently, unmarried taxpayers are at least partially taxes at 35 percent for income over $400,000. The low point of the bracket is slightly increased for joint filers and heads of households. 

Income tax Surcharge

The BBBA would apply a three-percent tax on modified adjusted gross income of individuals, estates and trusts in excess of certain amounts.  Theis would eeffctively dribve the top rate to 42.6 prercent.

Capital Gains Rate Changes

The capital gain rates, which currently are set at the top rate of 20 percent for taxpayers in the highest ordinary income tax brackets, would be changed to align with the new proposed ordinary income tax brackets. Additionally, the 20 percent rate is proposed to increase to 25 percent.

Net Investment Income

The proposed legislation expands the scope of the net investmnet income (NII) tax of 3.8% to include "all business income", which would iinclude income derived from active participation in S corporations and LLCs and partnerships.  This rate of 3.8% would efftively drive the overall highest tax rate to a whopping 46.4%.    

Additional Changes

The proposal includes several other changes applicable to businesses, including the limitation of business interest expense and taxation of foreign income, as well as some changes to IRS funding and IRAs. Notable, no changes to the deduction of state and local taxes are included.

Payment Status #2 – Not Available Problem with Stimulus Checks

Taxpayers who have recently checked the status of their 2nd stimulus check with the IRS Get My Payment tool and o have received the message “Payment Status #2 – Not Available” will not receive a second stimulus check automatically, the IRS has stated. 

The agency has started automatically depositing and mailing out millions of the the second economic impact payments, worth up to $600 for individuals and each of their child dependents.

And while many Americans have received their second stimulus payments as was intended, the IRS now says that people receiving the "Payment Status #2" message on the Get My Payment tool may have to wait until they file their 2020 taxes to get the payment, even if they've received the first stimulus check with no issues. 

“The IRS advises people that if they don’t receive their 2nd Economic Impact Payment, they should file their 2020 tax return electronically and work thorugh the return to claim the Recovery Rebate Credit (line 30 of the current form draft) to get their entitled crdit (in lieu of a direct payment) and any resulting refund as quickly as possible,” notes the agency.

A spokesperson for the agency did not clarify why this is the case or why the issue seemed to affect those who had filed their 2019 taxes through H&R Block and TurboTax in particular.

TAXATION OF CORONAVIRUS RELIEF (CARES ACT) FUND GRANTS TO INDIVIDUALS AND BUSINESSES

The general welfare exclusion or GWE, a little known administrative exception, exempts from a recipient’s taxable income most payments from government agencies under legislatively-provided social programs that promote general welfare, like the recently issued Economic Impact Payments of 2020 that were issued under the Coronavirus Aid, Relief and Economic Security (CARES) Act^1..

To qualify under this exception, an exempt payment must (1) be made from a government fund, (2) be made for the promotion of general welfare (ie. generally based upon individual or family needs), and (3) not represent compensation for any services rendered.

Regarding similar payments made to businesses, like grants or the payments provided under the Cares Act’s (SBA) Paycheck Protection Program, it has been stated that these payments  generally do not qualify for the general welfare exclusion, because they are not based upon individual or family needs. Payments issued under the SBA's PPP program, for example, have been earmarked as loans, giving the recipient the ability to request loan forgiveness under SBA and IRS strict procedures.

In April, 2020, the IRS issued Notice 2020-32 and ruled that forgiven PPP loans may be excluded from gross income by an eligible recipient by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  However, it stated that any expenses associated with this tax-free income (eg. the forgiven loans) would not be deductible. In May, to assist in clarifying its position, the IRS issued Notice 2020-32, providing 2 examples stating that a taxpayer that receives a loan through the PPP is not permitted to deduct expenses that are normally deductible under the Code to the extent the payment of those expenses results in loan forgiveness under the CARES Act. This expense treatment is consistent with historic guidance regarding non-taxable income and any related expenses. In essence, it has the net effect of essentially reversing the tax-free benefit of the exclusion on any loan forgiveness.

And based upon the SBA's loan forgiveness application process, it could be well into 2021 until a borrower knows how much of their loan is forgiven. The question then becomes whether the forgiveness of the loan increases taxable income in 2020 when the proceeds are received and expenses are incurred or in 2021, when the borrower receives confirmation their loan is forgiven. There’s was also the question of whether the ultimate tax treatment of these income and expense items will match a business's financial statements prepared under generally accepted accounting principles (GAAP).  All of the answers to these questions appear to have been clarified in Notice 2020-32. 

It is not clear whether or not the SBA loans will be taxable for state tax purposes.  And to further complicate matters, "state-sponsored" program grants issued during the pandemic that are generally taxable for federal income tax purposes may or may not be taxable for state tax purposes. You will need to check with your state revenue agencies to get an answer to that question.

Note 1 - Because the individual is getting what amounts to a refundable tax credit in advance in the form of a stimulus payment, rather than waiting to get the money from the credit provided in 2021 (for 2020) when he or she actually files a 2020 tax return, he or she, in effect, is getting an advanced refundable tax credit.  If, for some reason, that individual doesn’t get any stimulus payment this year, but he or she is owed one, he or she can request it when filing a 2020 tax return. If they don't get the full amount that they were entitled to this year — say, they weren't able to get the $500 payment for an eligible child under 17 — they  should be able to request it once they file a 2020 tax return in early 2021. What if it turns out that the stimulus payment was more than that allowed? For example, suppose the IRS based a stimulus payment on a 2018 or 2019 tax return, when the income reported was lower, but the actual income is much higher for 2020? “If someone has income in 2020 that is higher than the tax return to calculate the advance rebate, they will not have to pay the credit back,” says Garrett Watson, senior tax policy analyst for the Tax Foundation, an independent, nonprofit tax policy organization. “In other words, any adjustments to a taxpayer's rebate on 2020 tax returns will be in the taxpayer's favor."

Tennessee—Multiple Taxes: Relief Announced for Taxpayers Affected by April Tornadoes and Severe Storms

Following the IRS decision to extend federal deadlines for individuals and businesses located in Bradley County or Hamilton County, Tennessee has extended the franchise and excise tax and Hall income tax filing and payment deadlines to October 15, 2020, for taxpayers located in those counties.

The relief postpones the franchise and excise tax and income tax filing and payment deadlines that fall between April 12, 2020, and October 15, 2020. Affected businesses and individuals will have until October 15, 2020, to file returns and make any payments. This includes estimated tax payments for the first two quarters of 2020 that were due on July 15, and the third quarter estimated tax payment normally due on September 15. The extension will be automatically applied to franchise, excise, and income tax accounts of taxpayers having a primary address in Bradley County or Hamilton County. (Extracted from Paychex State Tracker News)

Shipping Charges Taxable in Tennessee

According to the Tennessee Department of Revenue, Delivery charges are considered part of the sales price of an item if the seller charges the customer for the delivery. The state says that it doesn’t matter if the delivery charges are stated separately on the invoice, are included in the lump sum total, or what the terms of the shipping are.

On its website, the Tennessee DOR makes it clear that this statue supersedes the prior Sales and Use Tax Rule 1320-5-1-.71. That rule was replaced in 2008 when Tennessee became compliant with the Streamlined Sales and Use Tax Agreement, which makes shipping and delivery charges a part of the sales price.

Because the charges are considered part of the sale, retailers should always charge sales tax on delivery charges. 

Exception

The only exception to this rule is if the items sold are exempt from taxes — in that case, sellers should not charge sales tax on shipping

Secure Act Passed in December 2019 ...a Recap

SECURE ACT

The Further Consolidated Appropriations Act, 2020 (P.L. 116-94), a government spending bill enacted on December 20, 2019, which funds the government through September 30, 2020, served as the legislative vehicle for several year-end tax measures. Notably, the Act included the bipartisan Setting Every Community Up for Retirement Enhancement Act, known popularly as the SECURE Act. The SECURE Act draws upon the identically named House bill (HR 1994) and Senate's bipartisan Retirement Enhancement and Savings Act (RESA) (S 972). The SECURE Act makes major substantive as well as administrative reforms to retirement security, many of which are already effective. COMMENT: The SECURE Act is largely considered a "win" for employees as well as the financial services industry. However, many lawmakers, stakeholders and industry leaders are saying that although the reforms are a big step, more needs to be done. To that end, congressional tax writers on Capitol Hill appear unfinished in the realm of retirement security. Top bipartisan, bicameral tax writers have already expressed an appetite for moving forward this year on additional retirement security legislation. The SECURE Act made reforms to retirement planning and security in a number of areas, including Individual Retirement Accounts (IRAs), 401(k) plans, plan administration, and employer funding. IRA Changes The new legislation includes major changes for IRAs, including: ·         Moving the start date for requirement required minimum distributions (RMDs) to the year the owner turns 72; ·         Ending the 701/2 age limit for contribute contributions to an IRA; and ·         Shortening the distribution period for nonspouse inherited IRAs to a 10-year maximum. The 10-year window for distributions to a nonspouse beneficiary applies regardless of when the IRA owner dies. Thus, the change will severely limit the use of "stretch IRAs" as an effective planning tool. Limited exceptions are available. 401(k) Changes Some of the most significant 401(k) changes include: ·         Requiring plans to offer participation to long-term, part-time employees; ·         Encouraging auto-enrollment by increasing the cap; and ·         Streamlining the safe harbor for non-elective contributions. Employers with 401(k) plans must offer employees who work between 500 and 1000 hours year an additional means to participate in the plan. The rule change would only affect 401(k) cash or deferral arrangements, and no other qualified plans. Administrative Changes The new law also provides several other administrative changes: ·         Permitting distributions of up to $5,000 for the birth or adoption of a child without incurring the early-withdrawal penalty; ·         Count taxable stipends and nontuition fellowships as compensation for making IRA contributions; ·         Counting nontaxable difficulty of care payments earned by home healthcare workers as compensation for purposes of retirement contributions; ·         Allowing direct trustee-to-trustee transfers between retirement plans of lifetime income investments or annuities; and ·         Providing a safe harbor for plan sponsors in the selection of an annuity provider. Changes For Employers Small employers are now able to more easily band together to participate in pooled multiple employer plans (MEPs). Additionally, employers are encouraged to steer employees towards lifetime annuities. Other changes include: ·         allowing plans administrative flexibility, including relief for "close" plans; ·         new annual disclosure requirements; and ·         providing a safe harbor for plan sponsors in the selection of an annuity provider. Further, qualified defined contribution plans, 403(b) plans, and governmental 457(b) plans are now able to make direct trustee-to-trustee transfers to other employer-sponsored retirement plans or IRAs of lifetime income investments or distributions of a lifetime income investment in the form of a qualified plan distribution annuity, if a lifetime income investment is no longer authorized to be held under the plan. Participants are now able to preserve their lifetime income investments and avoid surrender charges or fees. "There is still more that we can do to help more Americans save for their retirement," Sen. Rob Portman, R-Ohio said. "I believe that passage of the SECURE Act can help pave the way for bolder reforms in legislation I have introduced with Senator Cardin called the Retirement Security and Savings Act. I believe the Senate Finance Committee [(SFC)] should hold hearings and a markup on this legislation, and I will work closely with Senator Cardin to move it forward," Portman added. COMMENT: A spokesperson for SFC Chairman Chuck Grassley, R-Iowa, told Wolters Kluwer on January 14 that "nothing is planned at the moment," when asked about the potential SFC markup. Back to top ^

Shipping Charges Taxable in Tennessee

According to the Tennessee Department of Revenue, Delivery charges are considered part of the sales price of an item if the seller charges the customer for the delivery. The state says that it doesn’t matter if the delivery charges are stated separately on the invoice, are included in the lump sum total, or what the terms of the shipping are.

On its website, the Tennessee DOR makes it clear that this statue supersedes the prior Sales and Use Tax Rule 1320-5-1-.71. That rule was replaced in 2008 when Tennessee became compliant with the Streamlined Sales and Use Tax Agreement, which makes shipping and delivery charges a part of the sales price.

Because the charges are considered part of the sale, retailers should always charge sales tax on delivery charges. The only exception to this rule is if the items sold are exempt from taxes — in that case, sellers should not charge sales tax on shipping.

Part Sale Part Gift of House to Parents

Tax Court Determines Gain On Part Sale/Part Gift Of Residence To Parents

In Fiscalini, TC Memo 2017-163. an individual (a son) sold his personal residence to his parents after previously being gifted part of the same residence by them, as well as having them pay off outstanding mortgages as part of the sale to avoid foreclosure. 

In this Tax Court case, the Court found that the taxpayer owed long-term capital gain on the sale, but not to the extent argued by the IRS.

In this situation, the parents took title to a portion of the home representing the down payment. They stepped in again, buying back the house when mortgage refinancing left their son facing foreclosure during the 2007 economic downturn. 

Sorting out the nature of a gift and its tax basis and the impact of buy-back arrangements (in this case), as in any case, can sometimes raise questions with the IRS.

Background

The taxpayer and his parents purchased a home. The parents contributed $40,000 cash and the taxpayer took out a $234,000 mortgage. A few years later, the parents gifted their share of the home to the taxpayer. Over the years, the taxpayer claimed he put $50,000 in improvements into the home. He also had refinanced his home until, at the start of the economic downturn in 2007, he found himself facing foreclosure, unable to make the mortgage payments. His parents stepped in again as purchasers, paying the taxpayer $975,000 for the property, paying off the $664,000 mortgages and by an acceptance of  "a gift of equity" from the son of the $295,000 difference (less $16,751 settlement costs).

On audit, the taxpayer and the IRS disagreed over the amount of capital gain realized.  They each  based their arguments upon different conclusions over the taxpayer’s adjusted basis ($329,000 vs. $234,000, respectively) and the amounts realized on the sale of the property ($664,000 vs. $975,000, respectively).

The Court’s analysis

The Tax Court agreed with the taxpayer that the parent’s initial gift of the $40,000 original share of the home was basis that carried over to the taxpayer. His basis equal to the original $274,000 purchase price of the home could not be increased by his claimed $50,000 in improvements, however, since the court determined that he failed to carry his burden of proof for that amount.

The Tax Court also agreed with the taxpayer that the purchase price for determining long-term capital gain was $664,000, and not $975,000: reasoning that the gift of the difference was not made subsequent to the sale but instead was part of it, and also accepting the fact that cash did not exchange hands for that amount; instead, it was a transfer of property that was in part a sale and in part a gift.

After reducing the purchase price by the $16,751 settlement costs and excluding $250,000 of the gain under the Code Sec. 121 home-sale exclusion, the court found that the taxpayer was required to recognize $122,000 of long-term capital gain from the sale to his parents.

References: CCH Dec. 60,996(M) 

IRS Direct Pay and EFTS Systems Now Have Email Notice Options

Any taxpayers using IRS Direct Pay or EFTPS to pay their taxes can now sign up for an email notification, the IRS has announced.

The new email feature sends tax payment notifications directly to taxpayers’ email accounts. The email notification is to contain the confirmation number that the taxpayer receives at the end of any payment transaction. Businesses using the systems and making payments through a payroll service provider can also opt in to receive email notifications. Once they have opted in, taxpayers will receive email notifications for all payments made through EFTPS, including those made by a payroll service provider.

The IRS advises that, to protect taxpayers, there will not be any web links embedded within the email notifications. If taxpayers see any type of link in an email appearing to be from the IRS, they should not click on those links.

http://www.IRS.gov; Commerce Clearing House TRC FILEIND: 21,156.05.

Investment Advisor Guarantees Don't Protect Against Losses

I'm not an investment advisor, although I have been asked to analyze an investment or a proposed one now and then. I have been watching the Travelers Golf Tournament this weekend and noticed the numerous commercials being aired and directed at investment advisors that are providing for guarantees. A certain investment firm has been offering to refund investment advisory fees when investors are unhappy, while another has been offering to rebate the fees after two quarters of negative performance. Some investors I know have expressed concerns and questioned me over these offers.

The problem: Many investors mistakenly believe that they will get better advice because of these offers and will be protected from investment losses. The guarantees are not a good reason to select a particular brokerage nor, by any means, a useful way to judge the value of the assistance you may get over one quarter of performance activity. .

How some of these offers work: one allows customers who use any of five advisory services to request a refund of fees for the previous quarter for any reason. The services include the firm's Managed Portfolios, whose model of mutual funds and exchange-traded funds (ETFs) are selected with the help of an adviser.  The minimum investment is $25,000. Another is private-client package, which provides an adviser who creates a tailored portfolio.  That minimum investment is a cool $500,000. Annual fees are 0.9% of your managed assets or lower.  I'm also not sure based upon a footnote you'll find with its website, whether or not either of these offers applies to anyone other than a "current client".

Another firm's service fees rebate only applies to a particular service, which provides for an adviser and assists in selecting among several model portfolios. If your holdings experience two consecutive quarters of negative returns, the firm will automatically refund the fees from both quarters (but not the losses that most certainly go along with the negative earnings). This package requires a $25,000 minimum investment and charges an annual fee of up to 1.25% of managed assets. This guarantee does not reimburse your for investment losses, even if your not satisfied.  You will simply get your fees back. 

.

It has been said that both firms (and all firms, for that matter) worry about losing clients to much-lower-cost services known as robo-advisers who are offered by firms ranging from online newcomers to giants such as Vanguard and Fidelity. These robo-­advisers generally charge 0.35% or less to generate model portfolios of exchanged traded funds even though most of these so-called investment advisors won’t put you in touch with a human adviser.

So offering a "money-back" guarantee (for fees) is not helpful in choosing an investment, nor an advisor and doesn't protect your funds against losses.

Tennessee Economic Presence Rule on Hold

Tennessee: New Law Prohibits Enforcement of “Economic Presence” Administrative Rule For Sales and Use Tax Until Legislative Approval Received

H.B. 261, signed by gov. May 25, 2017 New law prohibits the Tennessee Department of Revenue from collecting any sales or use taxes authorized under Tenn. Comp. R. & Regs. 1320-05-01-.129(2) and permitted under a ruling of any court, until such court’s ruling has been fully reviewed and the rule has been approved by legislative action.

Under Tennessee's recently passed ruling (Tenn. Comp. R. & Regs. 1320-05-01-.129(2)), out-of-state businesses who have not satisfied the physical presence requirement (that do not have a physical presence in the State) in Tennessee and that engage in regular and systematic solicitation of consumers (end users) in Tennessee and that make sales exceeding $500,000 to consumers (end users) in Tennessee during the previous twelve-month period are generally deemed to have a “substantial nexus” with Tennessee, and as such are required to collect sales tax connected with those sales. 

Additionally, the Tennessee Department of Revenue recently issued a notice [Notice 17-12; see State Tax Matters, Issue 2017-23 for more details on this notice] explaining that pursuant to the April 10, 2017 agreed-upon order issued by a Tennessee chancery court which requires suspension of the enforcement of Tenn. Comp. R. & Regs. 1320-05-01-.129(2), out-of-state dealers are no longer required to collect and remit state sales and use tax as a result of Tenn. Comp. R. & Regs. 1320-05-01-.129(2) – highlighting that this agreed-upon order does not affect any requirement that might apply to collect state sales and use tax under any other provision of Tennessee law.

Tennessee TNTAP Online Taxpayer Portal

The Tennessee Department of Revenue recently launched a new web site called Tennessee Taxpayer Access Point (“TNTAP”).  

The website now serves as a web access portal to a taxpayer’s Tennessee tax-related information.  A taxpayer will be able to:

• Access taxpayer account information, including various account balances
• Send and receive secure messages to and from the Department of Revenue
• View tax-related correspondence
• View, print, file, and amend various tax returns
• Make various tax account payments

To access the site, a taxpayer must create a TNTAP login.  Information on how to create a log in and what tax accounts are currently available for access can be found here : 

https://revenue.support.tn.gov/hc/en-us/articles/115001044006-Creating-a-TNTAP-logon

In addition, your tax professionals can also register for the site and thereafter use their registration to collaborate with and gain access to their client accounts. This access will require client (taxpayer) pre-approval.  

For Information on how to gain access to client accounts, go to:

https://revenue.support.tn.gov/hc/en-us/articles/115000817126-I-am-a-CPA-or-tax-preparer-How-will-I-gain-access-to-my-clients-accounts-