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Archive for the ‘IRS’ Category

IRS Cutting It Close For Hurricane Michael Filing Delay

Posted by taxguru on October 12, 2018

With Hurricane Michael barreling down on us, I was wondering when IRS would announce their official special delayed filing due date for 2017 income tax returns, as had been their customary policy during other large destructive weather events.  I was checking their news page every few hours for the past week.

The hurricane was declared a Federal Disaster by Trump, one of IRS’s main criteria for allowing more time for those affected by a humongous natural catastrophe to get their tax returns in.  I knew they would eventually get around to issuing an official news release regarding this event.  However, considering that the extended 2017 1040s are due in the mail in three days from now, by Monday, October 15, today’s news release was just in time for those of us who were affected by Michael. Now, people can focus on the clean-up tasks rather than stressing to meet the Oct 15 filing deadline.

IRS’s news release from today:
IRS extends Oct. 15 and other upcoming deadlines, provides expanded tax relief for victims of Hurricane Michael

The money quote from this news release:

“individuals who had a valid extension to file their 2017 return due to run out on Oct. 15, 2018, will now have until Feb. 28, 2019, to file.”

Posted in Due Dates, hurricane, IRS | Comments Off on IRS Cutting It Close For Hurricane Michael Filing Delay

IRS QBI Proposed Regs

Posted by taxguru on August 8, 2018

As most people know, the most complicated aspect of the TCJA was the brand new Section 199A deduction for 20% of Qualified Business Income (QBI).  In a perfect example of hasty, sloppy, vague, poorly explained legislation, how this new tax break will work in the real world is a big mystery.  In my 43 years in the tax biz, I can’t recall a more poorly defined bit of tax legislation.

Since the TCJA was signed into law in December, there has been an unending stream of articles, books, webinars and seminars on how we tax pros are supposed to calculate and handle this new QBI deduction.  To say that there are huge discrepancies between how people have been interpreting this new IRC Section 199A is a massive understatement.  Many tax analysts have made the correct assumption that the actual real life application of this new deduction won’t be firmed up for several years, after disputes with IRS over real life tax returns have been adjudicated in court.

The IRS has also been studying this issue and has just today published their first draft of proposed regulations on the QBI deduction.  Contrary to popular belief, what IRS thinks about a certain tax matter doesn’t automatically make it indisputable gospel.  It is just their opinion and taxpayers and their advisors are free to exercise their own differing opinions if there is some valid logic behind them.  With a law as vaguely written as TCJA, there are gigantic opportunities for a slew of different interpretations that will make just as much logical sense as what the IRS has come up with and will in the future.   

IRS Press Release: IRS issues proposed regulations on new 20 percent deduction for passthrough businesses

The proposed regulations184 page PDF

IRS FAQ Page on Section 199A

Tony Nitti’s review of the proposed regs in Forbes

Kiplinger’s 3-Page FAQs from 7/12/2018 (before the release of IRS proposed regs)

Review of proposed regs from TaxSpeaker (nee Jennings Seminars)

Posted in IRS, NewTaxLaws, QBI | Comments Off on IRS QBI Proposed Regs

Interest Rates Rising

Posted by taxguru on March 8, 2018

Another sign of a growing economy is the rising interest rates being paid on bank accounts and charged by creditors.  One of those creditors charging higher interest rates are our friends at the IRS, who are required by law to adjust how much interest they charge and pay each calendar quarter. 

As per their latest press release, the IRS interest rate will be going up to Five Percent (5.0%) as of April 1, 2018 from the Four Percent (4.0%) rate that has been in effect since April 1, 2016.  It will stay at that rate of Five Percent at least through June 30, 2018.

As you can see on this useful pdf chart of IRS interest rates since 1991, the last time they charged as much as five percent was in the first quarter of 2009. It’s been either three or four percent ever since then.

Just a reminder that the IRS interest rate is an Annual Percentage Rate (APR).  Many people have the incorrect impression that it is a daily interest rate because it is compounded on a daily basis.  As shown on this interest rate calculator, a debt with a 5.0% APR has an effective interest rate of 5.13% when the interest is compounded on a daily basis.

Even at five percent, IRS is a much more reasonably priced lender than many other sources, such as credit cards, which often charge over 30% APR.  If you owe money to IRS, it will save you a ton of interest by working out an installment payment plan with them rather than committing yourself to the usurious rates of the blood sucking credit card loan sharks.

Another reminder – This discussion has dealt with IRS interest rates on Federal tax debts.  Each State tax agency has its own procedures for adjusting, or not adjusting, what they charge as interest on their overdue taxes.  Some modify the interest rate annually, while some never change their percentage.  Arkansas is an example of the latter.  They have been charging ten percent (10.0%) for as long as I can recall.

Posted in interest, IRS | Comments Off on Interest Rates Rising

Right Under Their Noses…

Posted by taxguru on February 18, 2018

Most people give the IRS more credit for their alleged superpowers to sniff out every little tax mistake or fraud around the country than they deserve.  What kind of all-seeing detection abilities does IRS have if they aren’t even able to detect tax cheats in their own midst?

IRS still paying bonuses to tax cheat employees

Posted in cheats, IRS | Comments Off on Right Under Their Noses…

2018 IRS Mileage Rates

Posted by taxguru on December 17, 2017

As we all get ready for the transition to living in the year 2018, IRS has released its official standard mileage deduction rates to be used on 2018 tax returns.  While the 2018 tax returns won’t be prepared until the 2019 Tax Season, these figures are more currently relevant since most businesses use the IRS rates for reimbursing their employees for business related trips in their personal vehicles.

From the IRS news release:

Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
  • 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.
  • 14 cents per mile driven in service of charitable organizations.

 

As always, I want to encourage everyone who uses their vehicles for business purposes to keep track of their actual expenses because they are frequently much higher than the IRS’s standard rate, especially for more expensive vehicles that get lousy gas mileage. 

This article on the AAA website shows their calculations of typical annual operating costs for different types of vehicles.  Using 15,000 miles per year, AAA came up with annual operating costs ranging from $6,354 (42.36 cents per mile) for small sedans to $10,054 (67.03 cents per mile) for pickup trucks.  

Posted in IRS, Vehicles | Comments Off on 2018 IRS Mileage Rates

Catching Phony IRS Scammers

Posted by taxguru on December 4, 2017

I doubt there is anybody left in this country who hasn’t received a phony demand for money from scammers posing as IRS agents, whether by phone, email or snail mail.  I have been forwarding at least one such scam email to IRS’s special email address (phising@irs.gov) each week. 

Just as with other such scam emails, I have always been curious as to whether the crooks are ever caught.  This recent story about the arrest of three men in Georgia (USA, not Russia) and one in Illinois, with connections to a bigger organized crime operation in India, is a good sign that at least a few of the bad guys are being caught. 

With fake IDs, three Georgia men collected $666,537, prosecutors say

What is most mind boggling about these scammers is the fact that they allegedly conned 7,314 people to send them a total of almost $3.5 million for fictitious taxes.  Considering that this was just one gang, there have to be several others running the same kind of scam.  With all of the publicity about these scams, it’s a bit amazing that there are so many gullible folks who fall for it.  

IRS has a useful guide to dealing with these scams on their website that has been growing in size as more and more people get into this extremely lucrative criminal activity.

Tax Scams / Consumer Alerts

Posted in Crooks, IRS, scams | Comments Off on Catching Phony IRS Scammers

Is this some kind of joke?

Posted by taxguru on October 5, 2017

Unfortunately not.

IRS awards multimillion-dollar fraud-prevention contract to Equifax

IRS top brass continue to dig themselves even deeper down the untrustworthiness hole they have been in for the past few years.  This really boosts our confidence in giving IRS all of our personal financial and other information; not.  What could go wrong?  Unfortunately, when taxpayers’ private info falls into the wrong hands due to these idiots, there’s nothing we can do about it.  IRS, as well as all government employees, can’t be sued for stupidity.    

 

I also considered some other headlines for this hard to believe news.

The Blind leading the blind

Dumb and Dumber

Stupid is as stupid does

Posted in IRS | Comments Off on Is this some kind of joke?

IRS Hurricane Delays

Posted by taxguru on September 28, 2017

IRS has released the following summary of the delayed filing dates for taxpayers and preparers who are/were located in the areas hit by Hurricanes Harvey, Irma and Maria.

IRS Offers Help to Hurricane Victims: A Recap of Key Tax Relief Provisions Available Following Harvey, Irma and Maria

Hopefully, Maria will be the last big storm of the year to require such measures.

Posted in disaster, IRS | Comments Off on IRS Hurricane Delays

IRS Extends Deadlines for Irma Victims

Posted by taxguru on September 12, 2017

All last week, as we all prepared for the oncoming wrath of Hurricane Irma, I was confident that everyone in Florida could expect the same kind of official extensions of time from IRS to file tax returns that had their first extension expiring in the next few months. 

While this was mainly 2016 1040s, even more pressing are the extensions for pass-through entities, such as LLCs, Partnerships, Trusts and S-Corps, which have extended deadlines of September 15, 2017 for their 2016 tax returns.  In the “old days” filing any of these tax returns late wasn’t a big deal because late penalties were only based on the amount of taxes due, and as pass-through entities, they had no taxes and thus no late penalties.  However this was changed a number of years ago and nowadays IRS is very aggressive in assessing late filing penalties of hundreds of dollars per month per K-1.  These frequently grow into thousands of dollars.

Since Sept 15 is fast approaching, for the past few days, I have been checking the IRS news page for an announcement similar to the one they had for Hurricane Harvey, giving all those affected by Irma more time to file their 2016 tax returns.  Until just a short while ago, the only Irma affected territory mentioned as having filing relief were parts of the U.S. Virgin Islands.

IRS has just released this news release, announcing the expansion of the list of areas that have been granted official deadline extensions due to Hurricane Irma disruptions.

As of right now (2:50 pm on 9/12/17) The IRS’s list of affected Florida areas only includes 16 counties.  Since the evacuation order, preparation and the actual storm included all 67 counties here in Florida, IRS will need to expand that list.  According to the IRS description, it’s a function of what they are told by FEMA.  While not all 67 counties were hit as hard as some others, most were affected by the storm.  Even people who didn’t have any actual storm damage, but heeded the Governor’s pleas to get the hell out of Florida, are going to need a lot of time to get back to their normal lives after returning to their homes.  

I can only assume that the IRS’s official list of affected Florida counties will grow over the next few days or weeks.  Rather than list 60 to 65 county names, they may just take the simpler route and include the entire State of Florida.

[Update 9/14/2017] – I noticed a few more Florida counties being added yesterday to the IRS’s list.  As of just before Noon today, their list of affected counties is up to 37, including Citrus, where we are located.  As more hurricane damage is discovered and reported up the chain of command (FEMA, et al), this list will continue to grow.

[Update 9/15/2017] – The list of affected Florida counties is now up to 46.  Just 21 more to include the entire state.

[Update 9/16/2017] – The IRS list of affected Florida counties has now been changed to “This represents all 67 counties of Florida.”

[Update 9/20/2017] – IRS has just declared that Georgia taxpayers and preparers are also eligible for the special 1/31/18 extended filing deadline due to Hurricane Irma.

Posted in disaster, extensions, IRS | Comments Off on IRS Extends Deadlines for Irma Victims

A necessary prerequisite for Tax Reform

Posted by taxguru on August 11, 2017

Ever since the amazing election of Donald Trump, there has been debate as to whether or not he and the GOP controlled Congress will be able to enact any substantial reform of our wild and wacky Tax Code in the near future.  We in the Tax Practitioner community would love to know the answer to this question so we will know what to advise our clients.  The uncertainty surrounding this issue is very frustrating for us all.

Basing predictions of what our rulers in DC will do on their blustery talk is insane and ludicrous. However, if we look at what actual advance preparations are being made by our rulers for such reforms, it doesn’t look promising. 

As these others have noted, it’s pretty much impossible to clean up the IRS Swamp when its crooks are allowed to continue running it  and nobody is punished for their flagrant crimes.  How can we have anything resembling a fair tax system when we can’t trust those in charge of it?

IRS head Koskinen hurting tax reform, Rep. Brady wants him fired

The IRS is STILL toying with conservative nonprofits. When will Trump jump in and drain this swamp?

Posted in Crooks, IRS, TaxReform | Comments Off on A necessary prerequisite for Tax Reform