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Yearly Archives: 2013

The Internet Sales Tax Exemption About To Expire?

February 19, 2013

U.S. states could collect millions of dollars in online sales taxes, with members of both parties in Congress sponsoring legislation that would resolve states' decades-long struggle to tax businesses beyond their borders.

A bipartisan group of 53 lawmakers in the Senate and House backed the Marketplace Fairness Act of 2013 last Thursday, Febuary 15, 2013, which aims to resolve the differences between bills introduced in the Senate and House in the last Congress. 

The proposed legislation permits States to enforce the Collection of Sales & Use Taxes from Internet Retailers, placing them on a par with brick and mortar businesses.  


This Act permits States to require qualifying Sellers to collect and remit sales and use taxes on remote sales, but the States must implement certain simplification requirements.  

The bills introduced in the House and Senate are substantially similar in all material respects. Each provides an important exception, the "Small Seller Exception", for businesses with less than $1 million dollars in annual domestic remote sales. 

Since 1992 when the Quill case was decided by the Supreme Court, States have been prohibited from collecting sales taxes on purchases made by in-state customers from out-of-state sellers who lack sufficient physical presence. Simplification is required because the Supreme Court ruling cited a concern that collecting sales tax for multiple states would be too difficult. 

The Marketplace Fairness Act requires that states must simplify their sales tax lawsin order to ease those concerns and make multistate sales tax collection easy.  

In the last decade, Internet sales have gone from 1.6 percent of all U.S. retail sales to more than 5 percent, according to Commerce Department data, a proportion that will likely grow as shoppers turn more to handheld devices to make purchases. In the third quarter of 2012, retail "e-commerce" sales were $57 billion, the department said. 

Large Internet retailers are worried the tax could drive up the cost of doing business. They would also have to create new systems and software to collect the surcharges, adding to their costs.

Amazon said in July it prefers having the tax issue resolved at the federal level. States and cities say they can recoup billions of dollars with the tax. Some estimate around $11 billion in tax revenues are currently being lost, due to exempt internet sales.

In the last decade, Internet sales have gone from 1.6 percent of all U.S. retail sales to more than 5 percent, according to Commerce Department data, a proportion that will likely grow as shoppers turn more to handheld devices to make purchases. In the third quarter of 2012, retail "e-commerce" sales were $57 billion, the department said.

Large Internet retailers are worried the tax could drive up the cost of doing business. They would also have to create new systems and software to collect the surcharges, adding to their costs. Amazon said in July it prefers having the tax issue resolved at the federal level.

States and local jurisdictions will clearly benefit from significantly increased tax revenue, but internet purchasers will find their bargain purchases much reduced in value and businesses will find their compliance costs increased.

 

Have State & Local Tax Issues? 

Contact the Tax Lawyers at Marini& Associates, P.A.

 

for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms

Sources:

 

Read more at: Tax Times blog

How to Report Your Tribal Trust Settlement to the IRS? Up Dated

February 19, 2013



On Friday, February 15, 2013 we posted How to Report Your Tribal Trust Settlement to the IRS?

 
Since then the IRS announces the publication of Notyice 2013-16, which updates and supersedes Notice 2013-1. 

Notice 2013-1, 2013-3 IRB 281, provides guidance on the federal tax treatment of per capita payments that members of Indian tribes receive from proceeds of certain settlements of tribal trust cases between the United States and those Indian tribes. Additional tribes have settled tribal trust cases against the United States since publication of Notice 2013-1. This notice provides an updated Appendix that reflects the additional settlement agreements.

Notice 2013-1 Appendix is modified and superseded.  
 

Tribes That Have Entered into Settlement Agreements of Tribal Trust Cases

1. Assiniboine and Sioux Tribes of the Fort Peck Reservation

2. Bad River Band of Lake Superior Chippewa Indians

3. Blackfeet Tribe of the Blackfeet Indian Reservation

4. Bois Forte Band of Chippewa

5. Cachil Dehe Band of Wintun Indians of the Colusa Rancheria

6. Chippewa Cree Tribe of the Rocky Boy’s Reservation

7. Coeur d’Alene Tribe

8. Confederated Salish and Kootenai Tribes

9. Confederated Tribes of Siletz Indians

10. Confederated Tribes of the Colville Reservation

11. Confederated Tribes of the Goshute Reservation

12. Crow Creek Sioux Tribe

13. Eastern Shawnee Tribe of Oklahoma

14. Hualapai Indian Tribe

15. Iowa Tribe of Kansas and Nebraska

16. Kaibab Band of Paiute Indians of Arizona 　

17. Kickapoo Tribe of Kansas

18. Lac Courte Oreilles Band of Lake Superior Chippewa Indians

19. Lac du Flambeau Band of Lake Superior Chippewa Indians

20. Leech Lake Band of Ojibwe

21. Lower Brule Sioux Tribe

22. Makah Indian Tribe of the Makah Reservation

23. Mescalero Apache Tribe

24. Minnesota Chippewa Tribe

25. Nez Perce Tribe

26. Nooksack Indian Tribe

27. Northern Cheyenne Tribe of Indians

28. Omaha Tribe o Nebraska

29. Passamaquoddy Tribe of Maine

30. Pawnee Nation

31. Prairie Band of Potawatomi Nation

32. Pueblo of Zia

33. Quechan Tribe of the Fort Yuma Reservation

34. Red Cliff Band of Lake Superior Chippewa Indians

35. Rincon Luiseño Band of Indians

36. Rosebud Sioux Tribe

37. Round Valley Indian Tribes

38. Salt River Pima-Maricopa Indian Community

39. Santee Sioux Tribe of Nebraska

40. Sault Ste. Marie Tribe

41. Shoshone-Bannock Tribes of the Fort Hall Reservation

42. Soboba Band of Luiseno Indians

43. Spirit Lake Dakotah Nation

44. Spokane Tribe of Indians

45. Standing Rock Sioux Tribe

46. Stillaguamish Tribe of Indians

47. Summit Lake Paiute Tribe

48. Swinomish Indian Tribal Community

49. Te-Moak Tribe of Western Shoshone Indians

50. Tohono O’odham Nation

51. Tulalip Tribes

52. Tule River Indian Tribe

53. Ute Indian Tribe of the Uintah and Ouray Reservation

54. Ute Mountain Ute Tribe

55. Winnebago Tribe of Nebraska

56. Qawalangin Tribe of Unalaska

57. Tlingit & Haida Tribes of Alaska

58. Northwestern Band of Shoshone Indians

59. Hoopa Valley Tribe

60. Ak-Chin Indian Community

61. Oglala Sioux Tribe

62. Yurok Tribe

63. Cheyenne River Sioux Tribe

Need Tax Help the Tax Treatment of Tribal Trust Settlement Proceeds?

Contact the Tax Lawyers at Marini & Associates, P.A.
for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms
or Toll Free at 888-8TaxAid (888 882-9243).

 

Read more at: Tax Times blog

Are You an IRS Audit Target? Part I

February 18, 2013

The IRS said it audited more than 1million individuals in fiscal 2012 for the sixth year in a row, collecting more than $50 billion for the third consecutive year. While those numbers might seem high, audit rates are really quite low. The IRS’ audit rate is roughly 1.03 % of all tax returns filed.

The IRS generally has kept up its audit activity despite a $305,000,000 budget cut that reduced full-time staffing by 8 % over the past two years, including 6 % in the enforcement area over the past year. That 1.03 % audit rate last year was almost double the level of a decade earlier.
Certain activities and behaviors can put you in greater danger of being Audited by the IRS.
High income is one. “Audits in the upper-income ranges remained substantially higher than other categories,” the IRS stated in a recent report. Of people with less than $200,000 in income, 0.94 % faced an audit. That jumped to 12.14 % of those earning at least $1 million.
Certain business categories are another. The IRS said it’s taking a closer look at “flow-through entities,” which include partnerships and Subchapter-S corporations. Audit rates in both areas have increased in recent years, though they both remain slightly lower than 0.5 %.
Then there are big corporations. Of those with assets of at least $250,000, more than 29% got audited in fiscal 2012, which ended last Sept. 30.
Self-employed individuals who file Schedule C also face an elevated risk of audit. One curiosity: Those Schedule-C filers earning between $100,000 and $200,000 actually had worse odds, with 4.3% of returns audited, compared with those earning more money, where the audit rate was 3.8%.
The IRS has gotten more reward-focused about the taxpayers selected for audit.

“Like all smart businesses, the IRS wants to turn a profit these days,” according to a commentary by the National Association of Enrolled Agents, an organization of licensed of return-preparation specialists.“Currently, tax returns are selected for audit based on the chance that the IRS will find enough errors or missing income to generate additional taxes — and perhaps penalty and interest.”

We will continue this discussion in Are You an IRS Audit Target? Part II.


Are you Being Audited by the IRS?


Contact the Tax Lawyers at Marini & Associates, P.A.

for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms
or Toll Free at 888-8TaxAid (888 882-9243).




Sources:

azcentral.com
msn.com

3 tips to avoid an IRS audit

Something less fun than doing your taxes? Getting an audit. Here's how you can avoid one.

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The details of the IRS discriminant-function program are a secret. It includes more than just raw numbers. For example, if your tax return shows a ZIP code from a low-income neighborhood and you deduct a charitable contribution of $10,000, regardless of your adjusted gross income, the computer is going to notice. That doesn't mean you're going to be audited, but the probability has soared.

Want to play the audit game? The IRS audited 1,581,394 individual tax returns in the fiscal year that ended Sept. 30, 2010. That was a rate of 1.1%, up from 1.0% the year before. But only 22% of the fiscal 2010 examinations were face-to-face audits. The rest were correspondence exams.

Of returns showing income of $200,000 or more, the audit rate was 3.1% in fiscal 2010, up from 2.8% the year before.

Unless you fall within the specific targets or have substantial income, I'm betting that the probability of an IRS audit will go down this year. This is one of those lotteries that you don't want to win. How lucky do you feel?

 

 

http://money.msn.com/tax-planning/are-you-in-the-irs-cross-hairs-schnepper.aspx

 

 

 

 

Read more at: Tax Times blog

Are You an IRS Audit Target? – Part II

February 18, 2013

We previoustly posted Are You an IRS Audit Target? - Part I.  We continue this discuss herein.

Several approaches can improve the odds that you won’t be caught in an audit. Some are surprisingly simple. These include fact-checking names and Social Security numbers for you, your spouse and dependents and filling out accurate occupational descriptions for you and your spouse.

Other tips cited by the NAEA include accurately reporting“all the income that the IRS knows about,” as IRS computers will match all W-2s, 1099s and other tax documents for you with your Social Security number.
“When you receive a substantial part of your earnings in cash or without paperwork, that doesn’t mean you’re off the hook,” the group adds. “IRS computers look at certain aspects of your lifestyle and will tag you for audit if your visible income is much too low to match your ZIP code or family size.”
CCH cites several types of deductions that raise red flags because they aren’t allowable. These include trying to claim a loss on your home, deducting excessive moving expenses and trying to claim medical deductions for unnecessary cosmetic surgeries.
Yet nothing seems to draw scrutiny like the adoption credit. A staggering 69 % of such returns were audited last year, with the examination process extending four months on average.
Even if you're not in one of the above target groups, you're not necessarily off the hook. Some returns are randomly selected. But most "winners" of the audit lottery are identified by the tax agency's discriminant-function program.

Under that program, IRS has created a number of composite hypothetical taxpayers. The agency's computers compare your return with those of the hypothetical taxpayers. The further your return is from the statistical norms, the more the computer clicks. And, the more the computer clicks, the higher the probability your return will be kicked out for review.

The table below gives average itemized deductions for 2009 returns filed in 2010. If your deductions are above average, the IRS is more likely to notice you.

US taxpayers' average deductions
Adjusted gross income
Interest
Taxes
Charity
Medical
Under $15,000 $8,838 $3,337 $1,496 $8,414
$15,000-$29,999 8,434 3,184 2,048 7,783
$30,000-$49,999 8,699 3,943 2,274 7,028
$50,000-$99,999 10,153 6,247 2,775 7,269
$100,000-$199,999 13,456 11,069 3,888 9,269
$200,000-$249,999 17,572 18,524 5,947 21,599
$250,000 and up 25,227 48,317 18,488 38,149

Regardless of the averages, deduct only the expenses you actually incurred. If you spent more than the average, claim it. Just be prepared to substantiate your numbers.

Are you Being Audited by the IRS?




Contact the Tax Lawyers at Marini & Associates, P.A.
for a FREE Tax Consultation at www.TaxAid.usor www.TaxLaw.ms
or Toll Free at 888-8TaxAid (888 882-9243).




Sources:

azcentral.com
msn.com

Read more at: Tax Times blog

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