For the highest income taxpayers—returns showing adjusted gross income of $10 million or more–the audit rate dropped from 14.52% in 2017 to just 6.66% in the latest report.
By comparison, for households with AGI under $200,000, the audit rate dropped slightly, stayed the same, or climbed (from 0.48% to 0.54% for $50,000 to $75,000 AGI households).
It’s not a surprise that audits are dropping overall. The IRS’ budget is smaller these days and its staff of enforcement workers is lean. Technology upgrades and enforcement wherewithal are among the agency’s most pressing funding needs.
In her recent annual report to Congress, National Taxpayer Advocate Nina Olson listed audits (correspondence exams, field exams and office exams) among the nation’s most serious tax problems.
Still, the Government Accountability Office says the tax gap—the difference between tax amounts that taxpayers should have paid and what they actually paid voluntarily and on time—as 82% of owed taxes, leaving an annual gap of $458 billion.
Be a part of Crain’s 10th annual Small Business Week. The largest educational and business development event in the region—just for small business owners, entrepreneurs and those who want to join this world. The event finder page has programs to help all life cycle stages of business. Be sure to set time aside to take full advantage of five days of networking, fact-finding, building, sharing and celebrating your business success.
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 they’re all offered at 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, May 1, 4:00 PM – 5:30 PM 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.
SBA Financial Assistance; What You Need, When You Need It
Fri, May 3, 10:30 AM – 12:00 PM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103 Presented by the U.S. Small Business Administration (SBA) If you need access to capital to help you achieve your business goals, the SBA offers a variety of funding programs for all kinds of small business ventures. What kind of funding is right for you?
Small Business Center on the Road Expo Sat, May 4, 11:00 AM – 3:00 PM The Arturo Velasquez Westside Technical Instituite, 2800 S Western Ave, Chicago, IL 60608, USA The Small Business Center on the Road Expo is free and open to the public. It provides new and existing entrepreneurs resources to start or grow their business here in Chicago. For more information and to register go to www.chibizexpo.com
Resources to Start, Run and Grow Your Business Wed, May 8, 4:00 PM – 5:30 PM City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by the City of Chicago Department of Business Affairs and Consumer Protection (BACP) Whether you’re a startup, established or about to expand your business, find out what resources are available to entrepreneurs. In this workshop, we will provide an overview of the resources that are essential to launching or growing a business in Chicago, which include access to capital, supportive services and grants programs. Additionally, we will discuss small business resources that are offered by the City of Chicago, Chambers of Commerce and Business Service Organizations.
Resources for Creative Entrepreneurs
Fri, May 10, 10:30 AM – 12:00 PM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by the City of Chicago Department of Business Affairs and Consumer Protection (BACP) The City of Chicago’s Department of Business Affairs and Consumer Protection in collaboration with the Department of Cultural Affairs and Special Events will share tips and resources to assist the creative entrepreneur with launching their business. Presented by Kenya Merritt, City of Chicago Department of Business Affairs & Consumer Protection (BACP) & Frayne Lewis of the City’s Music Office.
How to Write a Business Plan – What you need to know!
Wed, May 15, 4:00 PM – 5:30 PM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by Donna R. Rockin, Managing Partner of 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.
Meeting Your Cyber Security Challenges in 5 Steps
Fri, May 17, 10:30 AM – 12:00 PM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103 Presented by the Better Business Bureau (BBB) Cyber crime targeting businesses is on- going and continues to be a major concern. Learn how five steps can build awareness and an action plan to deter cyber criminals and help avoid the problems that could destroy a business. This presentation uses the latest information about hackers and data breaches to educate businesses how to protect themselves. Better Business Bureau teamed with National Cyber Security Alliance and National Institute for Science & Technology, along with local cyber security experts to create a scale-able program that any size company can use to create an individualized cyber security program.
How to Open a Concession at O’Hare or Midway Airport
Wed, May 22, 4:00 PM – 5:30 PM
City Hall, 121 N. LaSalle St – 8th Floor, Room 805 Presented by the Chicago Department of Aviation – Concessions Department Are you interested in operating a restaurant or shop at O’Hare or Midway International Airport, but don’t know where to begin? Come and learn about the Request for Proposals (RFP) process, how to operate a business at the airport, and a summary of the Airport Concessions Disadvantaged Business Enterprise (ACDBE) program.
Nuts and Bolts of Creating a Charitable Organization
Fri, May 24, 10:30 AM – 12:00 PM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103 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.
Accounting Best Practices
Wed, May 29, 4:00 PM – 5:30 PM
City Hall, 121 N. LaSalle St – 8th Floor, Room 805 Presented by Michelle Ringold, Ringold Financial Management Services, Inc. At the end of this training, participants should have a better understanding of the importance of accurate financials, requirements, and best industry practices including obtaining financing. The main topics will be as follows: Role of a Certified Public Accountant (CPA), Accounting System Basics, Financial Statement Overview, Budgeting/Financial Projections, Securing Banking/Bonding/Proper Insurance and Understanding What it Takes to be Successful.
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.
“The facts about how a taxpayer conducts their investment activity are more important than whether they are pursuing long-term or short-term results.” -Bryan Camp
The author does a nice job navigating us through three historical tax court decisions, comparing the first two and then using the most recent to explain why the first two still make sense in the context of today’s world and tax code. His reconciliation of the first two cases to (in a sense) produce the third gives us a long history of facts and circumstances that I feel can be used as a pros-and-cons scale (if not an actual template) for arguing a client’s position one way or the other.
If you have any interest in the grey area where “continuity, constant repetition, regularity and extent of effort” comes up against short-term versus long-term investments (stock, real estate, or otherwise), I highly recommend giving it a read.
The AICPA has submitted comments to the IRS and Treasury Department providing recommendations in five areas of the new Sec. 199A:
Safe harbor for rental real estate
Deemed trade or business for all commonly-owned arrangements
Allocation based upon gross receipts
Unadjusted basis immediate after acquisition (UBIA) on section 734(b) adjustment
Expansion of the definition of QBI
Of these, I feel the one that applies most directly to small business clients and their tax preparers is the recommendation about allocating deductions proportionately based on QBI, not gross receipts:
Allocation based upon gross receipts – Treasury and the IRS should modify Treas. Reg. § 1.199A-3(b)(1)(vi). Specifically, the AICPA recommended that taxpayers allocate the various deductions, which are not direct deductions of the trade or business, proportionately to the businesses based upon relative positive QBI – not gross receipts.
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 they’re all offered at 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, April 3, 3:00 PM – 4:30 PM 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.
Business Licensing 101 Fri, April 5, 9:30 AM – 11:30 AM City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by City of Chicago Department of Business Affairs and Consumer Protection (BACP) Attendees will learn the 3 steps to obtain a business license and access free business resources to start or expand their business.
Paying Hourly Employees Properly
Wed, April 10, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by Noah Frank, Labor & Employment Attorney in SmithAmundsen’s Chicago Office The U.S. and Illinois Departments of Labor are increasingly scrutinizing companies to make sure their employee pay procedures and policies are compliant with federal, state, and local laws. Indeed, after years in the making, on March 7, 2019, the U.S. DOL announced its new proposed “Final Rule” for salary exempt employees. Join attorney Noah A. Frank of SmithAmundsen for an engaging, fast-paced discussion on properly classifying employees as exempt vs. non-exempt, making valid wage deductions and reimbursements, and more to stay compliant!
Building a Compelling Brand Marketing Strategy!
Fri, April 12, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103 Presented by Dorothy Muszynska, DM Marketing Group Businesses must have a compelling Brand Marketing Strategy in place before creating and implementing tactics such as print, digital, social, or event marketing. More often than not, smaller businesses skip the “strategy” step resulting in an unsuccessful tactical execution. In this workshop, we will go through the steps of a simple Brand Marketing Strategy for a product or service. The presenter will be able to answer one-on-one questions in English and Polish after the workshop.
5 Tips To Double Your Online Reviews And Build A Stellar Online Reputation Wed, April 17, 3:00 PM – 4:30 PM City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by Thomas B. Varghese, eBizUniverse Attend this workshop and you will have an understanding of why your online reviews matter. You will learn about understanding your audience and how to build a reputable and profitable brand along with tips on how to build a stellar online reputation. You will also learn about specific tactics for improving the reputation of local businesses and what to do when your online reputation is attacked.
How To Get Money For Your Business Fri, April 19, 9:30 AM – 11:00 AM City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103 Presented by Craig Feldman, Bloom Lending Without positive cash flow, it is difficult to take care of the everyday functions of the business or have the ability to buy things such as equipment or materials. Let’s have a critical conversation about the importance of getting funding and discussing the key indicators of why working capital and equipment leasing are crucial in all areas of your business. You will learn about different types of funding that will be available, programs for all types of businesses regardless of your credit score, and about the required documents needed to apply for funding.
Press Release Basics
Wed, April 24, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by Independent Writers of Chicago Three experienced media professionals will teach the do’s and don’ts of how to write an outstanding press release that will attract media attention – and increase the chances of getting coverage. Also, learn what to do with a press release once it’s written. If you have a press release you would like critiqued, bring it! Speakers: Journalists David Steinkraus and Jeff Steele, and Advertising/Marketing specialist Laura Stigler of Shebang! Creative Content-2-Consulting.
How To Be A “YouTuber” For Your Business, Video Marketing 101
Fri, April 26, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by JinJa Birkenbeuel, Founder, The Honest Field Guide Podcast and CEO, Birk Creative This YouTube workshop is for small business owners with a working website who want to learn how to create custom content and also create YouTube ads for your business. Learn how to create a business YouTube channel, understand the anatomy of a YouTube channel, learn how to use tags, and best practices for shooting a basic video. You will also learn how to promote your video on YouTube and other channels.
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.
Although I can’t say I entirely agree with the “one-page business plan” being either a more effective approach or the “wave of the future,” I certainly have noticed that many folks are so daunted by the prospect of writing up a full business plan that instead they do nothing — which is not a healthy approach to starting your own small business. As such, I’m recommending this webinar recording offered at no charge by SCORE.
If your past business planning efforts have left you frustrated, you are not alone. Business planning does not have to be complicated and time-consuming. In this webinar produced by SCORE, a resource partner of the U.S. Small Business Administration, creator of The One Page Business Plan® Jim Horan will teach you how to simplify and make your planning process effective. You’ll learn:
How the discipline of having a plan on a single page can significantly change your mindset and behavior.
How to write a complete business plan in the equivalent of 29 tweets (or less) on a single page using key words and short phrases.
Three simple techniques for creating a first draft in 90 minutes.
Inside secrets on how to get others to polish and finalize your plan at no cost.
This has got to be the most self-referential blog post I’ve ever written. But the whole reason I started my blog in the first place was to create an easily-searchable resource to store the research I regularly perform for clients, as well as a one-stop reference location for important announcements I receive from the various tax and licensing agencies or professional organizations with whom I work. It was just a place I could store these items to make my own future searches easier — it was meant for my own use, with no idea it would become both popular and award-winning. (Thanks to all of you!)
In any case, today I was calculating quarterly estimated tax payments for an Illinois S-Corporation’s replacement tax for 2019 (which are pre-payments made toward the annual return total due — the same as quarterly estimated taxes for individuals, but these are voluntary), and I remembered that the old form had changed… and yet I couldn’t find an obvious hit when I googled what that replacement form was. But: I remembered that I’d blogged about it!
I couldn’t find the post after scrolling back through every post from yesterday through September 2018 and thought I was losing my mind. My husband taught me a neat google search trick:
“IL-516-B” site:thedancingaccountant.com
This means that I want google to look for my search term (the old tax form name), but only within my website. It worked! Turned out they posted this news for 2019 back in July of 2018, which is why I couldn’t find it when I looked back through my posts — I just didn’t go back far enough.
And the jist is that the form is now specific to the type of entity, not the type of payment. So S-Corp pre-payments will use the same form they would use if it were a balance due payment or an extension payment. Done!
The IRS just announced additional expanded penalty relief to taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year. The IRS is lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16, the threshold was 85 percent. The usual percentage threshold is 90 percent to avoid a penalty.
Today’s revised waiver computation will be integrated into tax preparation software and reflected in the forthcoming revision of the instructions for Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts.
Taxpayers who have already filed for tax year 2018 but qualify for this expanded relief may claim a refund by filing Form 843, Claim for Refund and Request for Abatement, and include the statement “80% Waiver of estimated tax penalty” on Line 7. This form cannot be filed electronically.
The ongoing fight between the IRS and a group of tax preparers has finally gotten some resolution (though not 100%), as the IRS received a big win in its PTIN fees case. This Forbes article does a great job of laying out the history and reasons for the court action.
I’ll let you read about the details — it’s actually quite interesting. But the reason it inspired a post is that it reminded me that I’d never actually checked out the PTIN Database that the IRS uses these unique identifying numbers to maintain.
Sure enough — it’s simple and works like a charm… at least it did when I entered my own zip code and last name, and my information popped up as being a Certified Public Accountant (CPA). It took me many years of hard work on my Masters in Accounting and Financial Management and another nearly-two-year period of studying for and taking all four parts of the CPA exam to earn this designation, and I’m extremely proud of it. I was glad to see the IRS has me listed correctly.
I know a lot of folks are confused about the various designations out there — and the IRS doesn’t do an amazing job explaining the differences, though they try. Many of the professional groups opposed the annual program to register tax preparers, though I personally felt it was a good move. Since the courts ruled that option out (even though it was expressly requested by Congress), I appreciated the fact that at least the IRS was allowed to stick with this PTIN directory, so that taxpayers have a one-stop shop to be able to confirm which credentials (if any) their tax preparer holds. It has the added benefits of allowing the IRS to track tax preparers who file a large number of inaccurate returns, which I believe protects us all, as taxpayers and as ethical preparers.
So if you haven’t checked out your tax preparer (or yourself, if you’re like me) on the database yet, I recommend you do!
