All posts by Nancy McClelland

IRS

IRS Confirms Tax Filing Season to Begin Jan 28

Leave a comment

Big news from the IRS today!

IR-2019-01, January 7, 2019

WASHINGTON ― Despite the government shutdown, the Internal Revenue Service today confirmed that it will process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled.

“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” said IRS Commissioner Chuck Rettig.

Congress directed the payment of all tax refunds through a permanent, indefinite appropriation (31 U.S.C. 1324), and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse.

The IRS will be recalling a significant portion of its workforce, currently furloughed as part of the government shutdown, to work. Additional details for the IRS filing season will be included in an updated FY2019 Lapsed Appropriations Contingency Plan to be released publicly in the coming days.

“IRS employees have been hard at work over the past year to implement the biggest tax law changes the nation has seen in more than 30 years,” said Rettig.

As in past years, the IRS will begin accepting and processing individual tax returns once the filing season begins. For taxpayers who usually file early in the year and have all of the needed documentation, there is no need to wait to file. They should file when they are ready to submit a complete and accurate tax return.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019 for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17, 2019 to file their returns.

Software companies and tax professionals will be accepting and preparing tax returns before Jan. 28 and then will submit the returns when the IRS systems open later this month. The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds.

Source: IRS Confirms Tax Filing Season to Begin January 28 | Internal Revenue Service

Education, IRS

NSAC Co-op Learning Network Webinar 1/15: Current Tax Developments

Leave a comment

Each month the National Society of Accountants for Cooperatives puts on a series of webinars aimed at educating accountants that work within or provide consulting for cooperatives. This Tuesday, January 15th, George Benson — one of the great minds in the world of accounting for co-ops — will be giving a one-hour talk on current tax developments. If you’ve read his articles or heard his talks before, you know you’re in for a treat. So tune in and catch up on tax issues within the cooperative sector.

Source: NSAC Cooperative Learning Network – Current Tax Developments

Education, Illinois

City of Chicago January 2019 Business Education Workshops

Leave a comment

Each month the City of Chicago offers twice-weekly (Wed & Fri) FREE business education workshops presented by experts in private practice as well as representatives from various city departments. There are quite a few good ones this month — see the list below — and this month they’re all offered in Room 805 of City Hall (right downtown and near public transit). To register for any of them, email BACPoutreach@cityofchicago.org or call 312.744.2086.

City Inspections – Ask Questions, Get Answers
Wed, January 9, 3:00pm – 4:30pm
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by the City of Chicago
To operate a successful business in Chicago you need to know what it takes to maintain compliance. Officials from several City departments will provide insight on how to operate safely, stay compliant, help prepare for inspections and highlight the do’s and don’ts of operating a business.

Roadmap to Business Financing
Fri, January 11, 9:30am – 11:00am
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by Fifth Third Bank
In order for businesses to start or grow, financing is often needed. Attend this workshop and you will obtain the pathway to financial success including traditional and non traditional credit sources and how to best prepare for when your company needs capital most.

Business Growth Strategies 101
Wed, January 16, 3:00pm – 4:30pm
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by The Women’s Business Development Center (WBDC)
Are you trying to determine how to grow your business and what area to target for growth? Do you need connections, capital, or additional capacity for your business? Come to the Women’s Business Development Center’s Business Growth Strategies 101 class to begin to identify what part of your business you need to grow, and gain tools that will help fuel your success. Topics that will be covered include finding your target customer, how to prepare for the first time you meet with a banker, and where to begin if you’re thinking about contracting with the government. This workshop will be most meaningful to businesses that have been in business for at least one year.

Rock Your Profile
Fri, January 18, 9:30am – 11:00am
City Hall, 121 N. La Salle St – 8th Floor, Room 805
Presented by Hayden Humphrey, Success Coach and Creative Entrepreneur
Attend this workshop and discuss the ins, outs, tips, and tricks of creating a stellar LinkedIn profile. During this workshop, we will discuss the major profile components, best practices for creating a stellar page, and some behind the scenes advice on navigating the platform. Please come prepared with your profile already created and any questions you have on the platform!

How to Obtain the new Pop-Up User or Pop-Up Host Business License
Wed, January 23, 3:00pm – 4:30pm
City Hall, 121 N. La Salle St – 8th Floor, Room 805
Presented by the City of Chicago Department of Business Affairs & Consumer Protection (BACP) and Department of Public Health (CDPH) – Food Protection
The City’s new Pop-Up User and Pop-Up Host business licenses are now available for short-term general retail, or food, sales entrepreneurs and owners of commercial spaces respectively. Learn about the unique features which allow the User to “pop-up” around the City during the license term, the license application and food protection requirements and process, as well as the benefit provided to existing Shared Kitchen Users and Retail Food license holders. Be ready to become one of the first to obtain these innovative licenses.

How to Write a Business Plan – What you need to know!
Fri, January 25, 9:30am – 11:00am
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by Donna R. Rockin, Managing Partner at Rockin Enterprises, Inc.
Learn how to create a comprehensive business plan. It’s easier than you think when you understand all the components that get included. You’ll receive a complete list of what to include to demystify the process. Writing a solid business plan is your roadmap to business success.

Nuts and Bolts of Creating a Charitable Organization
Wed, January 30, 3:00pm – 4:30pm
City Hall, 121 N. La Salle St – 8th Floor, Room 805
Presented by the Community Law Project
Attend this workshop to learn about the legal steps to becoming a charitable organization, the differences between a for profit and a nonprofit and provide an overview of the legal process of creating a not for profit corporation, developing a board of directors, explain bylaws, and obtaining recognition of 501c3 income tax exemption for the organization.

To register, email BACPoutreach@cityofchicago.org or call 312.744.2086.

Source: City of Chicago :: Business Education Workshop Calendar

IRS

The Government Shutdown and the IRS

Leave a comment

A large number of IRS employees have been furloughed at a pretty inopportune time. The unusually-complex and rushed tax law changes are already pushing tax season’s opening day into the future (no date yet announced, and it’s already January 4th), and the government shutdown is making it worse.

The IRS has listed a series of activities that will continue to be conducted on a limited or intermittent basis. Per the NATP, those that directly affect tax preparers and our clients include:

  • Completion and testing of the upcoming Filing Year programs
  • Processing of returns with payments
  • Processing remittances including payment perfection
  • Processing disaster relief transcripts
  • Design and printing of tax forms

The following activities will be furloughed and will NOT be conducted:

  • Issuing refunds
  • Processing non-disaster relief transcripts, income verification express service/return and income verification services
  • Processing 1040X, amended returns
  • All audit functions, examination of returns and processing of non-electronic tax returns that do not include remittances
  • Non-automated collections
  • Legal counsel
  • Taxpayer services such as responding to taxpayer questions (call sites)

This short, interesting article from MarketWatch outlines some of the unfortunate results of furloughing so many IRS employees: 3 unfortunate ways the government shutdown will impact you – MarketWatch

QuickBooks Software, Software, Tips

List of State Payroll Tax Returns Filed by Gusto

Leave a comment

Just a quick post — courtesy of a conversation I had with Gusto support yesterday. For those of you using Gusto for your payroll needs (and I highly recommend them — far superior to any payroll company I’ve ever used, and their integration with QuickBooks Online is seamless and available at no extra charge), it turns out there’s a comprehensive list of the state tax returns they file on behalf of their payroll clients.

I (and my clients) have often received payroll documents from various state and local tax agencies and wondered, “is this something I’m supposed to be filling out or does Gusto handle it for me?” In the past I’ve emailed their support team to ask, but at some point apparently they came up with a list, so I don’t have to take that extra step anymore. I figured I’d post it here so that other Gusto users can now do the same thing when that confusing notice arrives at your place of business.

And if you’re not already using Gusto and are interested, use my referral link to get the first month of your subscription free.

Source: State taxes filed by Gusto

Education, IRS, Tips

Hobby Loss Rules – You Can’t Deduct Your Expenses If You Aren’t In It To Make A Profit

Leave a comment

My favorite tax writer has done it again — Tony Nitti does an amazing job in this article of explaining the nine factors the IRS takes into consideration when deciding whether an activity is a business or a hobby.

Where I see this come up most frequently is when someone loves a product (or service) — some examples I’ve seen are essential oils, diet supplements, a brand of clothing, or even a coaching method — and they realize that if they become a reseller of that product or service, they get deep discounts on the products. Bam! All of a sudden they have a business, right? Wrong. If the reason they enter into the activity is to get a personal discount on personal products, that’s not a business. There are specific guidelines and definitions about what constitutes a business, and that’s not one of them.

However, if they engage in that same activity in a businesslike manner and with an intent to make a profit, then it is possible that it might be treated as a business and therefore the expenses can be deducted against the income.

I’ll quote the master to explain further, since he does such a good job with it; but ultimately what I want you to do if you’re in this area (or have a friend claiming they can deduct everything related to their part-time hobby) is to just read the article. I promise, it’s both entertaining and educational.

Some excerpts:

Many activities are not entered into “with the intent of making a profit.” And when that happens, the activity is a hobby rather than a business.

The ramifications of being categorized as a hobby are severe: while a business can generate a loss, when you’re conducting a hobby, you may only deduct your expenses to the extent of your income. But here’s the rub: these hobby expenses have historically been deducted as other miscellaneous itemized deductions on Schedule A. That makes a hobby classification particularly painful in 2018, because as part of the Tax Cuts and Jobs Act, there are no more “other miscellaneous itemized deductions.” So you get the idea: from 2017 on, if you’re conducting a hobby, and not a business, you have to include all of the income, but can’t deduct any of the expenses.

The case history surrounding the hobby loss rules extends FAR beyond 2018. There are countless decisions covering everything from horse breeding to rental activities to cattle ranching to motocross racing… a common theme would quickly emerge: if you don’t take your business seriously, then the IRS and the courts won’t either. Thus, it is absolutely imperative that you conduct your activity in a businesslike manner, and a good start would be to do the following:

  • have a mission statement,
  • maintain a separate bank account,
  • keep separate, accurate, books and records,
  • use those books and records to manage the business; i.e., if a business line isn’t profitable, perhaps you should consider abandoning it,
  • consult with people in the industry to see what has worked for them,
  • make efforts to cut costs if losses are continuing to mount.

In sum, it’s not enough to keep a QuickBooks account. You have to show that you’re really trying to generate a profit, and that means you have to actually, you know… use the information contained within those books and records to try and turn a loss into a profit.

Source: The Top Tax Court Cases of 2018: Reunited With The Hobby Loss Rules And It Feels So Good

Education, Illinois

Dec 12-21 Chicago Business Education Workshops

Leave a comment

Chicago’s Department of Business Affairs & Consumer Protection (BACP) offers small business workshops every Wednesday and Friday. Workshops vary each month and are conducted by City Officials, experts, and partner business organizations. There are only four left in 2018:

Press Release Basics: Wed, December 12, 3:00pm – 4:30pm
Drawing Web Traffic – Increase Your Audience, Grow Your Business: Fri, December 14, 9:30am – 11:00am
The Basics of Employment Policies, Handbooks & Contracts: Wed, December 19, 3:00pm – 4:30pm
Everything You Need To Know About Business Insurance: Fri, December 21, 9:30am – 11:00am

All workshops are free and open to the public. Workshops are held at BACP’s offices located in Room 805 and Room 1103 at City Hall, 121 N. LaSalle St., in downtown Chicago. The full calendar is here.

To register for a workshop, email BACPoutreach@cityofchicago.org or call 312.744.2086.

Also, in case you weren’t aware, BACP offers a Business Start-Up Certificate Program, designed to give business owners the essential elements in starting and growing a business. Attend nine workshops at BACP and learn the essentials of business planning, financing, marketing, legal issues, technology and more. Complete the program workshops within six months and earn your certificate, as well as get free advice on your business plan. You can register for the Business Start-Up Certificate Program at any BACP workshop. Learn about the full set of BACP offerings here.

And visit their Business Video Library here.

Source: City of Chicago :: Business Education Workshop Calendar

Education

NSAC Cooperative Accounting Webinar Dec 11

Leave a comment

If you’re a client, friend or regular reader of this blog (or all three), you’ll know that I am passionate about education, especially when it comes to accounting for cooperatives. I believe that the cooperative structure is the most viable entity when it comes to achieving balance between social and economic goals. It is conducive to conducting both small- and large-scale businesses while not ignoring the needs of the community, its members, and our broader culture and society.

As such, I’ve encouraged my clients to consider adopting co-op structures and policies, and have encouraged my accounting colleagues to consider broadening the scope of their offerings to include co-op accounting and taxation. In my work with the National Society of Accountants for Cooperatives (NSAC), the National Cooperative Business Association‘s Co-op Professionals Conference (NCBA CPC), and the Cooperative Economy Summit, I’ve tried to build bridges and help mentor and develop the next generation of co-op accountants.

This upcoming course offered by NSAC is a three-hour introduction to accounting for cooperatives (plus a one-hour break for lunch). It covers the basics of what a co-op is, co-op taxation, and co-op GAAP.

Basic A&A Session 1
Date: Tuesday, December 11, 2018
Time: 11:00 AM ET / 10:00 AM CT / 09:00 AM MT / 08:00 AM PT
Approximate Duration: 240 minutes
Presenter(s): Phil Miller, Asst. NSAC Education Director & Meegan Moriary, USDA
Objective: This will be a 3 part CLN covering, What is a Cooperative, Basic Co-op Tax and Basic Co-op Accounting. There will be a 1 hour lunch break from 1-2 PM ET.
Field of Study: .5 tax .5 accounting
Program Level: Basic
CPE Credit: 3 Credit Hours
Delivery Method: Group-Live
No advanced preparation or prerequisites are required for this course.

Course Description
Introduction to Co-ops
This 50-minute course is one of the modules contained in the NSAC Basic Accounting Course, taught at a basic level. The course discussion includes:
What is a Cooperative?
Cooperative History
Cooperatives in the Community
Benefits of Cooperatives

Basic Co-op Taxation I
This 50-minute course is one of the modules contained in the NSAC Basic Accounting Course, taught at a basic level. The course discussion includes:
Tenets of Co-op Taxation
Co-op Taxation History
Applicable Internal Revenue Codes
Patronage Refunds
Section 521
Examples

Co-op GAAP
This 50-minute course is one of the modules contained in the NSAC Basic Accounting Course, taught a basic level. The course discussion includes:
GAAP Applicability
AICPA AcSEC SOP 85-3
AICPA Audit & Accounting Guide
FAS 71 Accounting for Regulation
Co-op GAAP Within FASB Codification

Source: NSAC Cooperative Learning Network – Basic A&A Session 1

IRS, Tips

New IRS “Tax Transcript” Email Scam

Leave a comment

From the IRS, November 27th 2018:

The IRS and Security Summit partners recently warned the public of a problematic scam affecting businesses. A surge of fraudulent emails impersonating the IRS and using tax transcripts as bait to entice users to open documents containing malware are on the rise. If a business’s employees open the malware, it can spread throughout the network and potentially take months to successfully remove.

This well-known malicious code, known as Emotet, generally poses as specific banks and financial institutions in its effort to trick people into opening infected documents. However, in the past few weeks, the scam masqueraded as the IRS, pretending to be from “IRS Online.” The scam email carries an attachment labeled “Tax Account Transcript” or something similar, and the subject line uses some variation of the phrase “tax transcript.”

Businesses should instruct employees to not open the email or the attachment, and to instead delete or forward the scam email to phishing@irs.gov.

Source: Tax Scams/Consumer Alerts | Internal Revenue Service

IRS, Tips

Censured Tax Professionals Can Now Be Looked Up Online

Leave a comment

When looking for a tax professional, you want to make sure they’re in good standing with the IRS. However, until recently, the public could only learn that a practitioner was sanctioned by reviewing each of the announcements of discipline published in the Internal Revenue Bulletin (IRB) on irs.gov, or by using a commercial subscription service that reports instances of “Circular 230” discipline (Circular 230 is the document that describes who is covered by the standards we must follow, and what those are).

The Office of Professional Responsibility’s (OPR, the organization responsible for making sure tax professionals follow the standards of their practice) solution was to compile the information into a searchable Excel document file; their disciplinary look-up contains searchable information regarding censures of practitioners for Circular 230 misconduct and suspensions and disbarments of individuals from practice before the IRS.

The list contains basic information on over 3,000 OPR censures, suspensions, disbarments, and miscellaneous restrictions on practice, such as permanent injunctions and denials of limited practice to unenrolled tax return preparers due to misconduct; it covers the last 25 years. The spreadsheet is searchable using the “Sort & Filter” and “Find & Select” features, and will be updated to add new entries when a disciplinary announcement is published in the IRB.

Hopefully this new tool will make folks more inclined to report unprofessional behavior to the OPR, knowing that it will be made public and others could be prevented from similar experiences. To report issues, concerns or any problems, contact the OPR at Internal Revenue Service, Office of Professional Responsibility, SE:OPR, Room 7238/IR, 1111 Constitution Avenue NW., Washington, DC 20224 or fax to (202) 317-6338.

Source: Search for Disciplined Tax Professionals | Internal Revenue Service