All posts by Nancy McClelland

IRS

IRS Filing Date Announcements

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The IRS made two announcements yesterday about filing dates. One is that for Tax Year 2016, E-File closes this Saturday, November 18; after that, disaster victims and others need to file on paper.

While most individuals have already filed their 2016 federal tax returns, certain taxpayers may qualify for an extension until Jan. 31, 2018. This includes taxpayers who live in a federally declared disaster area, have a U.S. tax filing obligation, and had previously obtained a valid 6-month extension of time to file their federal tax return.

The second announcement is that the IRS has not yet set the date on which they will be accepting Tax Year 2017 returns.

Speculation on the Internet that the IRS will begin accepting tax returns on Jan. 22 or after the Martin Luther King Jr. Day holiday in January is inaccurate and misleading; no such date has been set.

The IRS must keep an eye on pending legislation and extender tax provisions that may be renewed, and then finish updating programming and processing systems before they can announce a filing season start-date.

However, they also explain that:

Due to law changes first affecting last year’s returns, the IRS cannot issue refunds for tax returns claiming the EITC or ACTC before mid-February. This law requires the IRS to hold the entire refund — even the portion not associated with the EITC or ACTC. However, there is no need to wait to file such returns since the IRS will process them to the point of refund and then begin refund release when permitted by law.

Tips

Six Common Client Financial Mistakes

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The AICPA‘s Journal of Accountancy ran a short but excellent article today noting the six most common financial mistakes that clients make:

  1. Miscalculating startup costs or personal funds.
  2. Failing to plan and project.
  3. Buying unnecessarily.
  4. Failing to analyze all revenue streams.
  5. Ignoring the human element in mergers and acquisitions.
  6. Delaying a succession plan.

They stress the importance of having a proactive approach, involving proper management training — rather than procrastinating, overreacting, or calling their CPA in a panic when facing over-extension, employee problems, customer losses, or even bankruptcy.

With small businesses, we see these issues regularly, but especially the first two, which are intrinsically related — miscalculating or underestimating startup costs is the number one mistake we see clients make when starting a business, and going into operations under-capitalized is a harbinger of difficulties to come. However, with more planning and projection (second on the above list), one can come much closer to an accurate estimate of startup costs — we always recommend working with a professional to create fluid forecasts, “what-if” projections, and “worse-case”/”best case”/”expected” scenarios.

Source: 6 common client financial mistakes – Journal of Accountancy

Education, QuickBooks Software

Proposed Changes to QBO ProAdvisor Certification Program

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Intuit just announced major changes to the annual certification and re-certification exams for QuickBooks Online. Their intent is to standardize the testing windows so that all ProAdvisors are up for renewal at the same time, and to recommend four hours of annual continuing education (recognizing that many of us already have much more stringent CE requirements due to CPA, EA or other professional designations). They also are considering switching from the requirement to re-take the same certification exam each year to opting for a shorter exam that focuses only on what’s new in QBO.

In the meantime, while they evaluate the best way to implement these changes, they have paused all requirements for certification, with the following statement:

If you completed the QuickBooks Online Certification on or after October 21, 2016, your Certification status will not expire until after we release the new Certification exam. If you completed the exam before October 21, 2016, you can complete the exam currently available in your ProAdvisor Center to maintain or reinstate your Certification benefits.

Source: New QuickBooks Online Certification – Coming in 2018 – QuickBooks Learn & Support

Education, Tips

October is National Women’s Small Business Month

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The SBA (@SBAgov) will be hosting a Twitter chat on women-owned small businesses on Thursday, October 26, at 3:00 p.m. ET/12:00 p.m. PT. They’ll be sharing tips and resources to help women start, grow and succeed in business. Follow along with the hashtag #SBAchat.

Linda McMahon, the Administrator of the US Small Business Administration, starts this article off by saying, “Seems hard to believe today, but thirty years ago, some state laws prevented women from getting a business loan without having a male relative co-sign for it.”

I had to admit, even I was shocked by that. Accounting is a field that’s not overrun by males, thankfully, and I’ve had no problem holding my own when confronted with discrimination, harassment, and condescension — though it’s happened all-too-often, especially with male lawyers, consultants, and financial advisers. (There was one time in particular when I was taken so off-guard that I didn’t stand up for myself, and actually had to sit at a side table while a male co-presenter stood at the lectern and took credit for a lecture that I wrote. I’ll never let that happen again.)

At this point, women-owned businesses are the fastest-growing sector of the economy, according to the National Association of Women Business Owners. And October is National Women’s Small Business Month, in honor of the creation on October 25, 1988 of the National Women’s Business Council.

Today, 9.9 million businesses in the U.S. are owned by women, they employ more than 8 million workers, provide more than $264 billion in wages and salaries to employees, and contribute $1.4 trillion in sales to our national economy. The SBA’s Office of Advocacy describes them as an “economic powerhouse”.

But we’re far from done with the work it takes to right so many years of wrongs — so much inequity, as well as cultural mores that leave us all affected with subconscious sexism. Let’s take a moment each day this month to pause and check our actions and reactions; and maybe it will last us at least part-way into November.

The SBA (@SBAgov) will be hosting a Twitter chat on women-owned small businesses on Thursday, October 26, at 3:00 p.m. ET/12:00 p.m. PT. They’ll be sharing tips and resources to help women start, grow and succeed in business. Follow along with the hashtag #SBAchat.

Source: Supporting Women in Business | The U.S. Small Business Administration | SBA.gov

IRS

IRS To Reject Tax Returns Next Year Without Health Coverage Info

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Accounting Today, October 19, 2017 —

The Internal Revenue Service said that for the upcoming 2018 filing season, it‎ will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the Affordable Care Act, the first tax season it has refused to accept such returns.‎

In an update Friday to the web page of its ACA Information Center for Tax Professionals, the IRS said it will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. On top of that, the IRS said tax returns filed on paper that don’t address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.

Full article here: IRS won’t accept returns next year without health coverage | Accounting Today

IRS

Budget Cuts Cause IRS to Discontinue ‘Automated Substitute for Return’ Program

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When a taxpayer who has a tax filing requirement fails to file a tax return, the IRS is allowed to use third-party information to determine a tax liability and assess it. The IRS handles these cases mostly through the ASFR Program, which enforces filing compliance against taxpayers who haven’t filed individual income tax returns but seem to owe a lot of money in taxes.

“The Automated Substitute for Return (AFSR) program is a component of our collection strategy to promote filing compliance,” wrote Mary Beth Murphy, commissioner of the IRS’s Small Business/Self-Employed Division, in response to the report. “Attempting to bring noncompliant taxpayers into compliance ensures fairness and reduces the burden on taxpayers who fully pay their taxes on time. Resource constraints have forced us to make difficult decisions with respect to some of our programs, even those that provide clear benefits to tax administration. Because a nonfiler strategy is important to our mission, we are currently working to develop one that fits within the current and future IRS operating environment, requiring fewer human resources, while providing an opportunity for us to achieve our desired outcomes.”

Full story here: IRS scales back program to go after people who don’t file taxes | Accounting Today

IRS, Tips

IRS California Wildfires Tax Relief

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I feel like almost all of my posts over the past few months have been regarding IRS disaster relief. Here’s one more, from today’s IRS E-News for Tax Professionals.

Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.

Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Oct. 8, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes originally due during this period.

This includes the Jan. 16, 2018 deadline for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected, including the Oct. 31 deadline for quarterly payroll and excise tax returns. Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017 also qualify for the extra time.

In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due after Oct. 8 and before Oct. 23, if the deposits are made by Oct. 23, 2017. Details on available relief can be found on the disaster relief page on IRS.gov.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes firefighters and workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year) or the return for the prior year (2016). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Source: IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File | Internal Revenue Service

Illinois, POS - Point of Sale

Cook County Sweetened Beverage Tax Likely to be Repealed

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A brief update — the Sweetened Beverage Tax ordinance for Cook County is likely to be repealed effective December 1st. Two commissioners who originally voted for it have changed their minds, and a newcomer to the Board supports repeal. This three-commissioner change would be veto-proof. More news soon.

(As a snarky aside, I don’t suppose they intend to reimburse all my small business clients who spent the time and effort to implement this tax — including some who paid thousands for add-on modules for their Point of Sale (POS) systems.)

Original blog post here — http://www.thedancingaccountant.com/?p=565

Sources:

Cook County soda tax to be repealed next week – Sun-Times

Cook County pop tax likely to be repealed next week as 3 more commissioners switch sides – Chicago Tribune

Education, IRS

IRS Webinar: Understanding Tax Relief for Victims of Disasters

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In today’s IRS e-News for Tax Professionals, the IRS announced a 2-hour webinar — held twice, once on Oct 18 and again on Oct 19 — geared toward helping taxpayers and their preparers understand various tax relief provisions in the code and administrative rulings.

Following the recent natural disasters in various parts of the U.S., this timely web conference will discuss:

  • Statutory Tax Relief for Casualty Victims (Both Individual & Business)
  • Special Rules for Federally Declared Disaster Areas
  • IRS Disaster Assistance Administrative Relief
  • Calculating and Reporting Disaster Area Losses
  • Involuntary Conversions resulting from Disaster Losses
  • Disaster Related Tax Issues: Harvey, Irma & Maria

A live question and answer session will round out the webinar.

Register and Attend:

Oct. 18 – 11:00 a.m. Eastern

Oct. 19 – 11:00 a.m. Eastern

Closed captioning is offered for the Oct. 19 web conference only.

Source: Understanding Tax Relief for Victims of Disasters

Tips

Small Business Requirements for the Affordable Care Act

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Many small businesses are confused about their requirements under the Affordable Care Act (ACA), popularly known as “Obamacare”. The short answer is, if you have fewer than 50 “full-time equivalent” (FTE) employees, and you don’t offer a health insurance plan, all you have to do is make sure each employee gets a copy of this 2-page letter, written by the Department of Labor.

It’s super-easy — it’s just a template from the Department of Labor that informs employees that:

1) there’s this thing called the Marketplace online where they can buy health insurance;
2) they might be eligible for credits at the Marketplace;
3) if they receive health insurance from their employer, those credits may be reduced; and,
4) they are not currently eligible for health insurance through you as an employer.
The employer needs to fill out page 2 with their company info and double-side print it, making sure all employees get a copy, including each time they bring on someone new.

Kim Buckey, vice president of client services at DirectPath, a Birmingham, Ala.-based employee engagement and health care compliance firm, has noted the following:

“There is no fine or penalty under law for failing to provide the notice, so if an employer simply stopped providing the form, there would be little consequence.”

She explained that the notices are models provided for employers to use, but employers are free to provide the information in another format. Here is technical guidance that explains the content of the health insurance marketplace notice, in case employers want to write their own notice. “Many employers distribute their own version or a highly condensed version of the boilerplate, sometimes as part of an annual legal notices package or brochure.”

Employers, as I mentioned, are not required to offer health insurance to employees until they have 50 FTEs (good calculation worksheet here), but of course they can choose to offer it, voluntarily. There are some guidelines that are essential once an employer decides to do so, and additional information can be found at Healthcare.gov: How the Affordable Care Act affects small businesses.