Illinois, Tips

Important Changes to Illinois Business Tax Payment Forms for 2019

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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.

Anyway, here’s the post: Important Changes to Illinois Business Tax Payment Forms On 1/1/19 | The Dancing Accountant

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!

IRS

IRS Announces Additional Relief from Underpayment of Estimated Tax Penalties

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From today’s NATP newsletter:

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.

IRS, Tips

Searchable Directory of Federal Tax Return Preparers with Credentials

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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!

Sources:
Forbes – IRS Gets Big Win In Multimillion-Dollar PTIN Fees Case

Journal of Accountancy – Court Upholds IRS PTIN Fees

Cooperatives, Education

ESOP-Cooperative Hybrid Webinar Series

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A respected colleague of mine from the Co-op Professionals Guild has just released a FREE two-part webinar series on how to create an employee-owned/ cooperative hybrid.

(They had previously come out with Part One, but it sounds like it’s been enough of a success that they’ve made a series.)

ESOPs and employee-owned cooperatives share many similarities as well as differences, and each model can provide a distinct set of features for a business and their employees. Some businesses have found that each model has not been “enough”, and have taken parts of each  to create something new – the “ESOP-operative”.

So how would such a hybrid work? This two-part webinar series will help outline how its done, what to look for, and watch out for, as well as a case study from a company that has made it work for them.

This webinar is co-sponsored by the Groban Olson Law Firm; the Center for Community Based Enterprise (C2BE); the Ohio Employee Ownership Center at Kent State University (with support from the USDA’s Rural Cooperative Development Program); Horizon Trust & Investment Management; and Once Again Nut Butter Collective, Inc. 
These webinars are provided free of charge with support from the USDA’s Rural Cooperative Development Program. If you would like to support the OEOC’s continued work in this area, you can do so here.

Source: ESOP – Cooperative Hybrid webinar series | OEOC

IRS

IRS Revised 2018 Instructions: Form 1120S & Schedule K-1

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From the IRS — and quite important for the current tax season:

Final regulations on both the §199A qualified business income deduction and §965 transition tax were issued in February 2019. The 2018 instructions for Schedule K-1 (Form 1120S) and instructions for Form 1120S have been revised to provide additional instructions based on these final regulations.

If you viewed or downloaded the 2018 instructions for Schedule K-1 (Form 1120S) or instructions for Form 1120S before Feb. 21, 2019, please note that your instructions are outdated.

Source: Revised 2018 Instructions for Schedule K-1 (Form 1120S) and Instructions for Form 1120S – 26-Feb-2019 | Internal Revenue Service

Education, IRS, Tips

IRS Refundable Credit Due Diligence Training Module Available

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Finally, (just in time for tax season? which started almost a month ago) — the updated Tax Year 2018 Due Diligence Training module is now available. The revised training includes tax law changes from the Tax Cuts and Jobs Act of 2017 that affect due diligence requirements, and it may qualify for one continuing education credit for Enrolled Agents and other tax return preparers.

The due diligence requirements for tax preparers have gotten more and more complex since first initiated some years ago, and the TCJA continued that trend. If you prepare tax returns, you owe it to yourself and your clients to get educated in this area.

Source: eitc due diligence training module | EITC & Other Refundable Credits

Education, Illinois, IRS, Tips

City of Chicago March 2019 Business Education Workshops

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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.

Ask the Experts: Workshop 1 of BACP’s “Hear Us Roar” Women’s Workshop Series
Fri, March 1, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103
Moderated by Kenya Merritt, Chicago Chief Small Business Officer
Join us for an open dialogue with leading women business owners as they share their entrepreneurial journey in BACP’s “Hear Us Roar” Women’s workshop series. We will kick off the series with Stephanie Hart, Owner and CEO of Brown Sugar Bakery, Olga Camargo, Owner and CEO of Antigua Construction and Dorothy Muszynska of DM Marketing Group.

City Inspections – Ask Questions, Get Answers
Wed, March 6, 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.

What Makes Up a Good Website?
Fri, March 8, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103
Presented by Hans Skillrud, President of BuildThis
Your website visitors should only see the tip of the iceberg of your website. This lecture dives into the 7 unique parts of a website needed to ensure a website can generate leads. We will discuss SEO, Content, Design, Development, QA, Maintenance & performance tools to help you create a compelling website that generates leads.

Small Business Center on the Road Expo
Sat, March 9, 2019
Kennedy-King College, 740 W 63rd St – Building U
For more information and to register see my recent blog post!

Everything You Need To Know About Business Insurance
Wed, March 13, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by Sandra Cavato Insurance Agency
In this session, attendees will learn the coverages needed for their business. We’ll discuss the right questions to ask your insurance professional and how to protect yourself and your business against lawsuits.

How to Obtain a Sidewalk Café Permit
Fri, March 15, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103
Presented by BACP, Small Business Center – Public Way Use (PWU) Unit, Anthony Bertuca
Come learn about the Sidewalk Café Permit Application process by attending this informative workshop. We will explain the application process, inform you of all the requirements, and help you get prepared to submit an application to take advantage of the new year long sidewalk café permit. The entire application process may take up to 30 days and the 2019 Sidewalk Café Season begins on March 1st.

Employee Classification & Compensation Concerns
Wed, March 20, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St – 8th Floor, Room 805
Presented by Charles Krugel, a Management Side Labor, Employment and Human Resource Attorney This workshop will be a discussion of the legal and record keeping issues concerning the independent contractor & employee classifications, as well as hourly vs. salaried compensation & overtime.

What You Need to Know About Your Business & Taxes
Fri, March 22, 9:30 AM – 11:00 AM
Presented by the Internal Revenue Service (IRS) and Ladder Up (LU)/Center for Economic Progress (CEP)
Topics include: Are you required to file a tax return? Is your worker an independent contractor or an employee? What will the IRS request during an audit? Are you required to make estimated tax payments? What resources does the IRS have for small business owners?

Meaningful Goal Setting – How To Stay Motivated And On Track Through Decision Making
Wed, March 27, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St – 8th Floor, Room 805
Presented by Dr. Benjamin Ritter, founder of Live for Yourself Consulting
When you run your own business it’s easy to become overwhelmed with the work you can do, and the decisions you have to make. Too often as business owners, we either just stop taking action or do too much. Either way, you are left stressed and exhausted. This workshop will discuss a decision making strategy that you can use to stay motivated and efficiently work toward your goals.

Navigating a Commercial Real Estate Transaction for Business Owners
Fri, March 29, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103
Presented by Lema Khorshid Esq., Partner, Fuksa Khorshid, LLC
Are you interested in leasing commercial property for your business? This is a tough real estate market – know how to navigate your way through commercial leases. You’ll gain an abundance of knowledge and practical tips from her as you learn how to locate the ideal property, negotiate the right lease for your business and understand the pitfalls in commercial leases, all while she teaches you how to save money.

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

Free Webinar: “How a Co-op ESOP Hybrid Works”

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I’ve met Deb at many co-op professionals conferences and I’m sure this webinar promises to be a highly interesting and educational opportunity for those interested in the topic.

Democratic ESOPs or ESOPs with many co-op features has been a specialty of Deb Olson’s law practice for 38 years. Once Again Nut Butter Collective (OANB) is the featured example company in this webinar. OANB’s CEO, Bob Gelser, a worker board member, Scott Owens, and Deb, who is board chair of OANB will present on the two and ½ years of work that has led to the OANB participatory decision making system, and the history leading to it. Deb will talk about legal mechanisms and issues. Bob and Scott will talk about the practical issues of making a participatory workplace of 80 people function efficiently. Chris Cooper of the Ohio Employee Ownership Center (OEOC) will moderate.

This event is cosponsored by the Groban Olson Law Firm, the Center for Community Based Enterprise (C2BE), the Ohio Employee Ownership Center at Kent State University (with support from the USDA’s Rural Cooperative Development Program);  Horizon Trust & Investment Management;  and Once Again Nut Butter Collective, Inc. 

Source: Meeting Registration

IRS, Software, Tips

Qualified Leasehold Improvement Depreciation Changes for 2018

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The new tax law has changed a few important things about what was formerly known as Qualified Leasehold Improvement (QLI) property — now called Qualified Improvement Property (QIP). Accounting Today did a nice job, as usual, outlining the changes in one of their articles. Forbes did a similarly solid job more recently discussing the technical glitches that still remain in this area.

Under the old law:

  1. Qualifying assets were defined as nonstructural improvements to the interior of a building.
  2. Certain improvements did not qualify, including any improvements to a property in which the landlord and tenant were related parties.
  3. Improvements made to a property within three years of the property’s completion were not eligible for QLI.
  4. Qualified real property was eligible for 15-year depreciation with additionally qualifying assets subject to bonus depreciation.

However, under the new law:

  1. QIP still requires that assets be in the interior of a building and be nonstructural in nature.
  2. But QIP does not require a lease between unrelated entities.
  3. And QIP eliminates the three-year requirement, simply stating that qualifying improvements must be done “after the building is originally placed in service”.
  4. QIP was supposed to be provided a 15-year life, similar to previous rules for QLI. This 15-year life would have made these assets eligible for bonus depreciation. Unfortunately, due to errors made in the rush to draft the new tax law, QIP is considered 39-year property, eligible for 179 treatment but not bonus depreciation.

I’m noticing that my tax software is offering me choices between 15-year and 39-year life, and wanted to give a heads-up to those out there in my situation that the technical correction that was supposedly on the way has not yet materialized, so it’s important to select 39-year in these cases.

Source: Common depreciation missteps and misconceptions: Qualified leasehold improvements | Accounting Today

IRS, Tips

“Drop-Dead” Due Dates for Tax Refunds, IRS Audits, and Collections

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This time of year, I get a lot of people reaching out to ask me, “what’s the drop-dead date for filing an overdue tax return from a prior year?” The short answer is — three years. But there are a few interesting rules about how this works.

(The Balance just recently updated their annual article on statutes of limitations, and it’s a nice short article that gives some good examples and links to IRS pages. Some of the info below was sourced from there.)

You have three years from the date of the original deadline of the tax return to claim your refund. When a refund expires, the federal government keeps the money, but you still are required to file the return regardless. The clock for how long the IRS has to initiate an audit doesn’t start ticking until you actually file your tax return, no matter how late it is. This means… get those overdue returns from prior years filed as soon as possible, regardless of your ability to collect any refund.

The IRS generally has three years to initiate an audit of your tax return. This deadline is measured from the day you actually file your tax return (unless you filed your taxes before the original due date, in which case the April 15th deadline applies).

But there are three exceptions to the rule on assessments and audits:

– The IRS has six years from the date a return is filed to audit a tax return and to assess additional tax if the taxpayer omits income that amounts to more than 25 percent of that which was reported on the tax return.
– The IRS also has six years to audit a tax return and assess additional tax on income related to undisclosed foreign financial assets if the omitted income is more than $5,000.
– The statute of limitations on audits and assessing additional tax remains open indefinitely if the taxpayer files a false or fraudulent tax return.

And finally, the IRS has 10 years from the day a tax liability is finalized to collect outstanding tax debts.

The 10-year statute of limitations on collections can be suspended in the following situations:
– While the IRS is reviewing an offer in compromise, installment agreement, innocent spouse relief, or collection due in processing the hearing.
– While a taxpayer is under the automatic stay of bankruptcy protection plus an additional six months.
– For periods when the taxpayer resides outside the U.S. for at least six months.

Keep in mind that not all states have the same statutes of limitations as the IRS does; The Balance offers more information on state-by-state rules in yet another clear and concise article — give it a read here.

Source: Tax Refunds, IRS Audits, and Collections

Accounting Services for Small Businesses