I’ve been meeting with clients lately who are extremely concerned about many of the confusing elements of the new tax law. And it is confusing — many CPAs are holding off on issuing any recommendations that aren’t reversible, waiting for a technical corrections bill and IRS guidance.

But one less confusing provision of the new tax law is clear — entertainment expenses are no longer deductible. Period.

The old law allowed a 50% deduction for entertainment expenses if business was discussed before, during, or afterwards. Starting January 1, 2018, unless the event has a direct business purpose, it cannot be deducted at all.

A few practical takeaways here:

1. If entertaining a client or sales connection, take them out to dinner instead of an event — and be careful that there is no entertainment component, like live music or theater.
2. Promotional events are still 100% deductible as marketing and advertising, so make sure your company has branding, signage, program recognition and advertising, etc. as a part of the gig.
3. There are rare situations where entertainment isn’t “Entertainment”, because a direct business purpose exists. For example, a luthier might take a potential client to hear a performance played on her instrument for the express purpose of illustrating the sound in a concert hall. The IRS might accept situations such as these as having a “direct business purpose” — but proper documentation will be essential.
4. This doesn’t mean you can no longer make business deals on the golf course or at the ball game — just make sure not to write them off on your tax return. There are other non-deductible expenses that are still a cost of doing business (such as parking tickets or other penalties), and Entertainment expenses should be tracked accordingly.

Source: The party’s over! Businesses can’t write off entertainment expenses under new tax law – MarketWatch

The IRS sent an “outreach” email to professional organizations today asking us to share this information with taxpayers.

The tax filing deadline has come and gone. If you didn’t file a tax return or an extension, but should have, you need to take action now. Here are some tips to help you:
• There is no penalty for filing a late return after the tax deadline if a refund is due.
• If you didn’t file and owe tax, file a return as soon as you can and pay as much as possible to reduce penalties and interest.
• For those who qualify, IRS Free File is still available on IRS.gov through October 15 to prepare and file returns electronically.
• If you don’t qualify for IRS Free File, you can use Free File Fillable Forms to e-file. This option uses electronic versions of IRS paper forms. It does some of the math, and works best for those who are comfortable doing their own taxes.
• You can get fast answers about your refund by using the Where’s My Refund? tool available on IRS.gov and through the IRS2Go mobile app. All you need is your Social Security number, tax filing status and the exact amount of your refund. Where’s My Refund? is updated no more than once every 24 hours, usually overnight, so you don’t need to check the status more often.
• If you owe taxes, you can view your balance, pay with IRS Direct Pay, by debit or credit card or apply online for a payment plan, including an installment agreement. Before accessing your tax account online, you must authenticate your identity through the Secure Access process. Several other electronic payment options are available on IRS.gov/payments. They are secure and easy to use. If you pay electronically, you’ll receive immediate confirmation when you submit your payment. Also, with Direct Pay and EFTPS, you can opt in to receive email notifications about their payments.
• If you need more time to pay your taxes, you can apply for an installment agreement with the IRS. The best way to apply is to use the IRS Online Payment Agreement tool. Once you complete the online process, you’ll receive immediate notification of whether your agreement is approved.
• No matter how or when you file, you should keep a copy of your tax return and all supporting documents.

The IRS E-file and Direct Pay systems are both down today, April 17th, Tax Day. It is an unhappy (and slightly grim) reminder to accountants to establish a policy — which I have held for the past 10 years or so — requiring all clients to submit signed e-file signature authorization forms by 6 pm on the day immediately prior to Tax Day. Personally, I insist on submitting all e-files before I go to bed that night (let’s be honest: by 2 or 3 am). I encourage you to do the same… next year!

In the meantime, this advice is being offered by CPA Practice Advisor. They will be posting updates throughout the day.

The credit card payment systems available through the IRS website appear to be functioning, however there is a fee associated with making those payments.

If the website stays down, taxpayers are still responsible for making payment by midnight tonight. An obvious alternative is to head to the Post Office.

The IRS has asked that efilers continue to proceed with their efiling, even if returns aren’t being accepted in short order.

Source: IRS Direct Pay is Down, Efile System also Down | CPA Practice Advisor

Accounting Today recently wrote up a good article on the challenges of the new Sec 199A — popularly known as the “20% Pass-Through Deduction”. I encourage giving it a read. I think the best takeaway for accountants and others running personal service companies comes from the last paragraph:

“Most accountants that are in a flow-through entity should probably continue that way,” Wheelwright said. “I don’t know any accounting professionals that leave money in the business, and if you’re going to take money out, it doesn’t make sense to be a C corporation,” he said. “Where being a C corporation does make sense is if you’re going to reinvest a large portion of the profits back into the business. Because of the double tax related to C corporations [the corporate tax plus the tax on dividends], most pass-throughs will want to continue to be pass-through entities.”

-Tom Wheelwright, Founder and CEO of ProVision

In a related article, Accounting Today reports:

“The National Society of Accountants wants the Internal Revenue Service to provide a six-month extension for businesses to make an election to be treated as S corporations for this year, arguing the current deadline of March 15 is just not enough time to make a decision given the uncertainty surrounding the new tax law.”

“By allowing a six month extension to Sept. 15, 2018, for a corporation to make an election to be treated as an S corporation for the current calendar year would afford time for all affected parties, as well as their tax adviser, to read and understand any such regulations and how they may impact their tax liabilities.”

-John Ams, NSA Executive Director