All posts by Nancy McClelland

Education, IRS, Tips

Webinar: Organizing & Operating a 501(c)(3) Non-Profit

1 Comment
CPA Academy is one of my favorite sources for topic-specific accounting education, and even better — their webinars are free.  Here’s one on a topic I’ve been asked about frequently: how to organize and operate a non-profit.  Jairo Cano, a tax attorney with Agostino Law, will be teaching this 1.5-hour webinar on Monday, March 13 and again on Monday, May 1.  Here’s a summary of the course:

In 2013, the IRS reported that tax exempt organizations held over $3.5 trillion in assets and received more than $1.8 trillion in gross receipts. Given the amount of money that passes through nonprofit organizations, it is not surprising that the IRS has increased its focus on these organizations. This webinar, offered by a leading tax controversy attorney will introduce attendees to:

  • The procedures to request and receive Section 501(c)(3) tax exempt status.
  • The requirement that the organization be organized for an exempt purpose and that it operate exclusively for exempt purposes. This discussion will include an analysis of the restrictions related to the organization’s ability to engage in for-profit activities.
  • The requirement that the organization not operate in a manner that results in providing private inurement to shareholders or a prohibited private benefit. This discussion will include an analysis on how the IRS evaluates compensation and payments for goods and services.
  • The Unrelated Business Income Tax, when it is required and how it is calculated.
  • The procedures to challenge a denial or revocation of exempt status at the administrative level as well as in Tax Court​.

This short, valuable webinar is appropriate for bookkeepers, accountants, controllers, and other non-profit professionals — as well as those looking to enter the industry or volunteer as a board member.

Source: CPA Academy

Education, IRS

What Trump’s Executive Orders Could Mean For Taxes

Leave a comment

Excellent, objective analysis from the most recent issue of Accounting Today on the challenges faced by preparers and tax planners — and their clients, American taxpayers — due to recent executive orders.

In rushing to get out executive orders in the first week in office to help fulfill campaign promises, the Trump administration has often acted without sufficient forethought and before Trump’s entire team has been approved by the Senate and taken their posts. Hopefully, as the Secretary of the Treasury and other key policy positions in the Treasury take their places, there will be a more careful review of how these executive orders and memoranda should apply in the tax context, with adjustments made accordingly. In the meantime, taxpayers and tax return preparers should probably assume that they will have no effect on 2016 tax return preparation. With respect to 2017, however, we will all have to stay tuned.

Read the full article here: Tax Strategy: What Trump’s executive orders could mean for taxes.

IRS

IRS Tax Time Guide Released

Leave a comment

The IRS has put together a “Tax Time Guide” to help taxpayers navigate the various tools and resources they have available to them to answer tax questions.

Below are a few of the most common tax time queries and the tools to find answers:

Checking on a tax refund?

Taxpayers can easily find information about their refund by using the “Where’s My Refund?” tool. It’s available on IRS.gov and on the official IRS mobile app, IRS2Go. Refund information is normally available within 24 hours after the IRS receives a taxpayer’s e-filed return or four weeks after the IRS receives a mailed-in paper return. The system is updated daily, so there’s no need to check more often.

Need help preparing a tax return?

Through the Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE) programs, eligible taxpayers can get help filing their return for free at one of several thousand community-based tax help sites. Sites are staffed by IRS trained and certified volunteers. Low- and moderate-income taxpayers and those age 60 and above can find the nearest site on IRS.gov’s VITA/TCE Site Locator.

Want a free do-it-yourself tax option?

The IRS Free File program, available at IRS.gov, offers 12 brand-name tax preparation software packages for free to the 70% of taxpayers who earned $64,000 or less in 2016. By answering questions in an interview format, the software does the work of finding deductions, credits and exemptions for which the taxpayer qualifies. For those earning more than $64,000 who are comfortable preparing their own taxes, IRS.gov offers Free File Fillable Forms. These are the electronic versions of paper IRS tax forms.

Need a tax return transcript?

For those who need a copy of their tax return, the IRS has an online tool to help. Transcripts are free and available for the most current tax year after the IRS has processed the return. Get Transcript provides online access to transcripts. Taxpayers can view, print or download their transcripts.

Need to make a payment?

IRS Direct Pay offers taxpayers the fastest and easiest way to pay what they owe. Available through the Pay Your Tax Bill icon on IRS.gov, this free online system allows individuals to securely pay their tax bills or make quarterly estimated tax payments directly from checking or savings accounts without fees or pre-registration. See IRS.gov/Payments for information on this and other payment options.

Can’t pay a tax bill?

For taxpayers concerned about a tax bill they can’t pay, the Online Payment Agreement tool can help determine if they qualify for a payment plan with the IRS. The Offer in Compromise Pre-Qualifier can help determine if a taxpayer qualifies for an offer in compromise. An Offer in Compromise is an agreement with the IRS that settles a person’s tax liability for less than the full amount owed.

Questions about an amended return?

The “Where’s My Amended Return?” tool provides the status of an amended tax return, Form 1040X. Taxpayers can check on the current year 1040X and up to three prior years. Allow up to three weeks after filing to check on the initial status, and up to 16 weeks for processing.

What about tax withholding?

The IRS Withholding Calculator helps employees make sure the amount of income tax taken out of their pay is neither too high nor too low. This tool can be particularly useful to taxpayers who, after filling out their tax returns, find that the refund or balance due was not what they expected.

Source: IRS Releases Tax Time Guide: Use IRS.gov Tools to Answer Tax Questions

Illinois, Tips

Chicago Bag Tax “Floor Tax Return” Due March 3rd

Leave a comment

Just a reminder that the “floor tax return” for the Chicago Bag Tax is due this Friday.  Don’t risk a $100 fine — take a look at my comprehensive guide to the bag tax and get this off your “to-do” list asap.  Please share far and wide with other small business retailers in Chicago; I’ve found very few how-to resources, and none that break it down step-by-step, and I’d love for my research for my own clients to be of use to other small business owners.

IRS, Tips

For Tax Preparers: Forms 1095-B and 1095-C Not Required For Filing — Alternatives Are Acceptable

Leave a comment

I had a tough time getting 1095-B & 1095-C forms from clients last year in time for filing, as many of their health insurance providers were delayed in sending them out.  Unfortunately, late last year, the IRS decided to allow providers to file extensions again, and I was dreading the same experience.

So you can imagine that I was pretty pleased to read, in today’s National Association of Tax Professionals e-newsletter:

According to Question 14 on the IRS Health Care Information Forms FAQ, you do not have to wait for either Form 1095-B or 1095-C from your client’s coverage provider or employer to file the individual income tax return. You can use other forms of documentation in lieu of the Form 1095 information returns to prepare the tax return. Other forms of documentation that would provide proof of a taxpayer’s insurance coverage include:

  • Insurance cards.
  • Explanation of benefits statements from the insurer.
  • W-2 or payroll statements reflecting health insurance deductions.
  • Records of advance payments of the premium tax credit.
  • Other statements indicating that the family had health care coverage.

Of course, many of these documents will not confirm that insurance was for the entire year, or all members of the family, so it is still best practice to get the 1095-B or 1095-C.  But when it’s unobtainable, it shouldn’t delay your client’s filing — just make sure they provide it to you once they are able.

Source: Questions and Answers about Health Care Information Forms for Individuals (Forms 1095-A, 1095-B, and 1095-C)

IRS

IRS Puts ACA Coverage Requirement On Hold — But Taxpayers Must Still Follow the Law

Leave a comment

I’m seeing a lot of questions on my tax professional newsgroups and discussion boards about the so-called “silent return” provision that has made so much news lately, and I want to set the record straight here.

For this filing season, the IRS had put system changes in place “that would reject tax returns during processing in instances where the taxpayer didn’t provide information related to health coverage.”  (I.e., they were “silent” on the topic.)  However, due to an executive order, they have removed this barrier to filing.

From a recent IRS website post:

“Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.”

However — and herein lies the confusion — this does not mean the ACA laws have changed (yet).

“Legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe‎.”

What it does mean is (as with any other area in a return where a taxpayer or preparer enters information that is incorrect, or does not answer a required question), the IRS has every right to come back and inquire, request further information, or even audit.  If the taxpayer is found to be out of compliance with the law, then corrections, penalties and interest would be due.

“Processing silent returns means that taxpayer returns are not systemically rejected by the IRS at the time of filing, allowing the returns to be processed and minimizing burden on taxpayers, including those expecting a refund. When the IRS has questions about a tax return, taxpayers may receive follow-up questions and correspondence at a future date, after the filing process is completed‎.”

This is no different than how the same issue was handled last filing season: the requirement was there, but ignoring it did not prevent your return from being e-filed or processed.

“This is similar to how we handled this in previous years, and this reflects the normal IRS post-filing compliance procedures that we follow.”

In other words — if your client refused to answer whether they were required to file 1099s or not, you wouldn’t just leave the answer blank on the tax return; you’d make it clear to the client that this is required information.  It’s the same thing here.  Just because refusing to answer the question about health insurance coverage will no longer prohibit the return from being processed does not mean you do not have to answer the question.  You are simply inviting your client to be audited, which is doing them a disservice.

More here, from Accounting Today: IRS puts new regulations and ACA coverage requirement on hold

QuickBooks Software

QB Online Referral Pricing Increase Soon!

Leave a comment

I just got word that my accountant-referral pricing on QuickBooks Online is changing soon.  It’s currently a “35%-off for the life of the account” discount.  Due to cost increases from Intuit, they have to switch to “50%-off for 12 months and then full-price afterwards”.  So, if you are thinking of moving to QBO from QB Desktop or spreadsheets, now is the time to do it.

(Yes, of course they’d do this during tax season. Sigh.)

To be fair, the 50%-off for 12-months is still better pricing than Intuit’s 50%-off for 6-months, but it’s not as good as perpetual 35%-off.  Please get in touch with me immediately if you’re interested in trying to get under the wire for the old deal; they haven’t given me an actual date for the change yet, and I’m not sure if I’ll get advance-warning beyond what they’ve just sent.

Education, POS - Point of Sale, Tips

Credit Card Processing Guide for Small Businesses

Leave a comment

(In case you know what you came here for, and don’t want to read my long-winded intro, here’s a link to the article you really want to read: Credit Card Processing Guide for Small Businesses – The Simple Dollar.)

I get contacted pretty often by companies asking if they can submit to my blog, or if I’d be willing to tout their product, website, app, etc.  Generally, the answer is “no” — I started this blog as a sort of collection of searchable bookmarks for myself, to save the research and resources that I’ve found helpful in my own practice and for clients; not as a marketing tool, and certainly not as a platform for folks to sell their solutions.

However, once-in-a-while, the information that I’m sent is so valuable and useful that… well, it fits all my criteria for bookmarking and sharing, and I feel lucky that the resource landed in my lap.  This is one of those posts.

I have mixed feelings about personal finance site The Simple Dollar — though much of the content is excellent, some of it is oversimplified, and certain articles seem to encourage readers to believe they can handle challenging financial situations without the advice of a professional.

But this article is the best I’ve ever seen on the topic of credit card processing for small businesses.  If you are starting a small business and haven’t yet made the decision about whether or not to accept credit cards; or if you’re at the point in your business’ development where it’s time to make the leap, but you’re not sure in which direction; or if you’re already accepting cards but are worried you’re paying too much: read it.  It’s comprehensive, full of information and examples, and if you’re willing to take the time to study it and take notes, you will not regret the investment.  In fact, it will likely save you time — and definitely money — in the long run.

“Due to the lack of transparency and hidden fees scattered throughout the credit card processing industry, there is a gross misconception of how debit and credit card processing work. This creates a challenge for many small business owners because making an uneducated decision could cost time and money.  For this reason, The Simple Dollar has developed a guide that aims to help small businesses gain in-depth knowledge about credit card payment processing, along with practical strategies to manage their fees and get the most out of their services.”

They offer advice on how to find the lowest possible credit card processing cost:

  • Isolate the markup
  • Choose a pricing model (pass-through pricing is cheapest)
  • Compare multiple processors with fees up-front and in writing
  • Calculate the total cost
  • Negotiate favorable terms (they even offer a list of terms they specifically recommend working on)

As well as suggestions on how to keep costs low, including tips for avoiding punitive interchange rates:

  • Track the processor’s fees
  • Interchange optimization
  • Avoid — Processing expired credit cards, Duplicating transactions, Setting a minimum or maximum limit on your transactions, Charging a usage fee for credit card transactions, Displaying full account numbers on your receipts, Processing Internet transactions with your retail merchant account, Running your personal card through your merchant account, and Splitting one transaction into several smaller transactions

So, give it a read, and share it with others you think might find it useful.  There simply aren’t many guides out there on this topic that are as worthwhile as this one: Credit Card Processing Guide for Small Businesses – The Simple Dollar.

Education, IRS, Software

2/28/17 CCH Webinar on S-Corp Reasonable Compensation for Shareholder-Employees

Leave a comment

I’ve been meaning to write a blog post on S-Corp “reasonable compensation” — a hot audit topic at the IRS these days — for quite some time… in fact, ever since discovering my favorite app of the year, RCReports, which has been a real game-changer for my practice and my S-Corp clients.

(Note: RCReports has its own series of webinars, which I can personally recommend.)

However, being in the bowels of tax season, for now I’m just going to encourage you to attend this CCH webinar on the topic, coming up on Feb 28, 2017 at noon Central-time:

Learn how the IRS determines “reasonable” compensation for S corp shareholder-employees: in this two-hour CPE webinar, business taxation expert Eric Wallace, CPA, will look at the latest developments in this hot area of dispute between taxpayers and the IRS.Mr. Wallace will review the latest legal and regulatory developments and provide practical guidance.

Spread the word to your S-Corp clients and colleagues who work with them.

Source: CCH® Webinars: February 28, 2017 – S Corp Reasonable Compensation for Shareholder-Employees

IRS, Tips

Avoid the Rush: IRS Online Options To Get What You Need

2 Comments

Today, an important note from the IRS, with a page full of great links to help you obtain information and assistance specific to your needs.  Don’t get caught on-hold forever… take a moment to see if your request can be answered more efficiently.

First, I recommend you save this 2-page pdf guide somewhere useful, or print it out and pin it to your bulletin board — the IRS Services Guide is a succinct reference for where to go to find what you need.

For further resources, all of the below comes straight from the IRS at Avoid the Rush: Online Options Help You Avoid Presidents Day Rush.

Avoid the Rush: Online Resources

Refund Delays – By law, the IRS must hold Earned Income Tax Credit or the Additional Child Tax Credit refunds until Feb. 15. Taxpayers will begin to see refunds claiming EITC/ACTC the week of Feb. 27. “Where’s My Refund?” will update for EITC/ACTC refunds on Feb. 18 for the vast majority of early filers who claimed the Earned Income Tax Credit or the Additional Child Tax Credit. Before Feb. 18, some taxpayers may see a projected deposit date or an intermittent message that the IRS is processing their return.

Where’s My Refund? – You just need a little info from your tax return to track your refund.

Finding your Adjusted Gross Income – If you changed tax preparation software products this year, you may be asked for your adjusted gross income to help verify your identity. You must use the procedures outlined on IRS.gov for getting your AGI. We cannot provide you with your AGI if you call.

Letter 4883C – We take many steps to protect you from identity theft. If you receive Letter 4883C, it’s because we stopped a suspicious tax return. Before you call, be prepared to validate your identity. See Understanding Your 4883C Letter for details.

ITIN Renewal – If you have an expired Individual Tax Identification Number and need to file a tax return, there are new rules this year.

Get Transcript – You can view your tax transcript, a summary of your tax return, online or you can order it by mail. You may need this for non-tax reasons such as student or mortgage loan income verification. Or you may need it to find your adjusted gross income.

Appointment Service – We’re trying to eliminate the long lines at our office, especially at this time of year. You must make an appointment for most services at our Taxpayer Assistance Centers. Again, most questions can be answered at IRS.gov.

Free File – Do your taxes yourself, using free, brand-name software through the IRS Free File program. A dozen partners offer free federal tax prep, and in many cases free state as well,  to anyone earning $64,000 or less. Taxpayers earning more can use Free File Fillable Forms.

VITA/TCE – Need help doing your taxes? Find volunteer help near you through our Volunteer Income Tax Assistance program or AARP’s Tax Counseling for the Elderly.

Avoid the Rush: Keyword Search

Still can’t find what you’re looking for?

Use our search tool to track down your topic and get the answer at your fingertips. Or, try our Interactive Tax Assistant. This is similar to the tool used by our customer service representatives to answer your tax questions. Our Help and Resources page also contains valuable information.

Avoid the Rush: News Releases

IR-2017-32, Feb. 14, 2017, Avoid the Rush: Be Prepared to Validate Identity if Calling the IRS

IR-2017-30, Feb. 13, 2017, Avoid the Rush; Use IRS.gov for Quick Answers to Questions

Source: Avoid the Rush: Online Options Help You Avoid Presidents Day Rush