More than 20,000 businesses are about to learn how serious the Internal Revenue Service is about stopping questionable Employee Retention Credit (ERC) claims. The tax agency has sent them a letter notifying them that they won't be getting the COVID-19 pandemic tax relief. Many of the claims were filed by ERC mills that have aggressively promoted the tax relief, often to businesses that did not qualify. The amount of such questionable claims prompted the IRS in September to stop processing all new claims. This first round of IRS letters to some of those who did file for the ERC is... Read more →
Business
Today is Small Business Saturday, a charge card marketing initiative that has become an accepted nationwide effort to celebrate small, independent retail operations. It's also an official tax holiday in the Land of Enchantment. New Mexico's Small Business Gross Receipts Tax Holiday falls each year on the Saturday after Thanksgiving. The tax holiday began at 12:01 a.m. today and ends at midnight tonight. For this one day, the state allows a gross receipts tax break on sales of qualifying items at certain small businesses. For the eligible companies, New Mexico provides a deduction from gross receipts for retail sales of... Read more →
Tax mistakes, unintentional or otherwise, mean penalties when discovered by the IRS. And the amounts could add up. (Photo by Polina Tankilevitch) The United States' tax system depends on voluntary compliance by taxpayers. But Uncle Sam is no fool. He and his tax collectors are believers of the adage "trust, but verify." The Internal Revenue Service also follows up on that verification with penalties when it finds taxpayers — and the professionals we pay to take care of our taxes — aren't fulfilling our tax responsibilities on our own. The most severe punishments come via criminal tax prosecutions. The IRS... Read more →
Taking advantage of these inflation-adjusted tax breaks could put more money in your pocket instead of Uncle Sam's bank account. (Photo by Sasun Bughdaryan on Unsplash) Each of our tax situations is unique. But every taxpayer can agree on one thing. We all want to pay the least amount of tax as possible. That universal goal can be reached by taking advantage of tax deductions, tax credits, and income exclusions. Deductions, like the standard amounts discussed in Part 2 of the ol' blogs annual tax inflation series, are a relatively easy, and popular, way to reduce a tax bill. Deductions... Read more →
Tax crimes that happen in Vegas, don't stay in Vegas. They end up with the convicted felon heading to federal prison. That's what happened to Scott H. Lawrence. The Las Vegas man pleaded guilty in July to more than $1.9 million in federal tax evasion. On Nov. 3, he was sentenced to one year and one day in jail. Growing tax evasion scheme: The tax troubles that finally landed Lawrence in jail grew out of an attempt to keep the Internal Revenue Service from collecting an earlier tax bill. And the criminal effort was years in the making, according to... Read more →
Taxes play a part in a business' success. And states' tax structures can attract, or discourage, businesses' decisions to locate within their borders. (Photo by Unsplash+ in collaboration with Getty Images) College football captures most sports fans' attention this time of year, but it's also prime time for baseball. So, with the World Series underway, it seemed fitting that this weekend's first Saturday Shout Outs goes to an item that uses a baseball measurement to evaluate and compare business taxes in the country's 50 states and the District of Columbia. As long-time readers of the ol' blog have already figured... Read more →
Unsplash+ in collaboration with Allison Saeng Ghost sightings are common this time of year. Some companies, however, find that ghost employees haunt their businesses year-round. Ghoulish tax tricks are also played on workers by some ghost employers. In both cases, the actions are not just criminal, but also are costly to all, including Uncle Sam, who are victims of these scary tax evasion tactics. Haunted by ghost workers: A ghost employee is a fictitious employee set up in a company's human resource and/or payroll system that receives paychecks. Basically, ghost workers are a form of embezzlement, as the nonexistent employees... Read more →
Confused about your workplace benefits options during open enrollment? Your answers to the following questions could help. (Photo by Priscilla Du Preez 🇨🇦 on Unsplash) Millions of U.S. workers are now deciding what workplace benefits they want in 2024. Many during this annual open enrollment period simply re-up the options they chose last year. I get it. It's easy. But you could be costing yourself, both in out-of-pocket cost and tax savings. So, before you make a final decision, ask yourself the following questions. 1. Will your company help your repay your student loan? College costs and the debt that... Read more →
Mega yachts in Portofino, Italy, a favorite harbor of the rich. (Photo by Ricardo Gomez Angel on Unsplash) The Internal Revenue Service announced last week that it had collected $160 million in back taxes from wealthy taxpayers. But that's just a pittance of what tax collectors globally could get if an international tax on billionaires is enacted, according to a European tax policy research group. The super-rich typically use complex business structures to avoid taxes, notes the European Union (EU) Tax Observatory, an independent research laboratory hosted at the Paris School of Economics. That leads to most of us in... Read more →
Small businesses' many challenges were multiplied during the COVID-19 pandemic. The Employee Retention Credit (ERC) helped many companies and their workers make it through that lean time. But recently, unscrupulous promoters have pushed some owners to improperly claim the ERC, creating new problems. Now the IRS is offering a way to correct those bad filings. (Image via Unsplash+ in collaboration with Getty Images) The Employee Retention Credit (ERC) helped lots of small businesses and their staff make it through the COVID-19 pandemic. When properly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees while... Read more →
Photo by Brett Jordan on Unsplash The Internal Revenue Service relies on taxpayers voluntarily filing correct tax returns and paying the tax amount shown on those forms. Millions will be doing just that tomorrow, Oct. 16, to comply with the extended filing deadline. Unfortunately, however, too many people find ways to avoid paying the U.S. Treasury what they legitimately owe. They are why the latest update on the Tax Gap shows it has grown. A lot. The Tax Gap is the amount of money the IRS is owed, but which it hasn't been able to collect. The agency's latest estimates... Read more →
You have a lot of responsibilities when you're self-employed. One includes making contributions to your retirement plan, which in some cases can be done as late as your filing extension deadline. (Unsplash+ in collaboration with Getty Images) Most IRA contributions must be made by Tax Day. For the majority of taxpayers this year, that deadline was April 18. But if you're self-employed and got an extension to file your 2022 tax return, you also got an extension to contribute to your entrepreneurial endeavor's retirement plan. That deadline, in case the days have slipped by you, is this coming Monday, Oct.... Read more →
These cattle chilling out in the West Texas Big Bend area don't appear worried about much. Their owners, however, have a lot of concerns, including the extremely dry conditions that could hurt the profitability of their agricultural endeavors. The IRS is offering some ranchers and farmers special drought-related tax relief. (Photo by Kay Bell) The recent burst of inflation was driven in part by industries trying to recoup some of their pandemic losses. Then the drought arrived, and things got worse. Weather wreaks havoc in many economic sectors, but particularly in food production. And since most of us regularly shop... Read more →
Photo by Tim Mossholder on Unsplash Businesses who applied for the Employee Retention Credit (ERC) aren’t the only ones upset with the Internal Revenue Service’s handling of claims. So are the Republican leaders of the House Ways and Means Committee. Rep. Jason Smith (R-Missouri), chairman of the tax-writing panel, and Rep. David Schweikert (R-Arizona), chair of the W&M Oversight Subcommittee, this week wrote to IRS Commissioner Daniel Werfel demanding an update on the ERC processing backlog. The ERC, also sometimes referred to as the Employee Retention Tax Credit or ERTC, was created during the COVID-19 pandemic to help businesses and... Read more →
Piles of illicit cash were a plot feature in the AMC show "Breaking Bad." Since meth-making kingpin Walter White couldn't bank it without raising suspicions, he kept his drug money under his floorboards and, finally, in a storage unit, where two underlings once used it to nap sans mattress. Anyone who watches crime programs (guilty!) knows one piece of tax law. Television, streaming, and movie crooks are always careful to avoid five-figure financial transactions. When these on-screen crooks deposit or withdraw more than $10,000 of their ill-gotten funds, the bank must report the large amounts to the Internal Revenue Service.... Read more →
Actor Bob Odenkirk in the season 4 finale of "Better Call Saul," where his titular character, after getting his law license reinstated, legally becomes Saul Goodman. (Screen shot from that episode's final scene) It's all good, man, for AMC Networks and Sony Pictures in their legal fight with Liberty Tax In August 2022, Liberty Tax Service sued Sony Pictures, the producer of "Better Call Saul," and AMC Networks, which broadcast the "Breaking Bad" prequel, for trade dress and trademark infringement. But apparently, attorneys for Sony and AMC were up to (OK, probably better than) Saul Goodman standards. They persuaded the... Read more →
The sentencing of the two Fort Myers businessmen this week comes as the Internal Revenue Service ramps up its compliance efforts on flow-through entities. Photo by Raze Solar on Unsplash Reliable contractors are worth a fortune in Florida. The Sunshine State has its share of overcast and worse days, as made disastrously clear by major Hurricanes Ian in 2022 and Idalia this fall. That's why it's so discouraging when home repair experts break bad. Like a pair of roofing contractors who cheated the Internal Revenue Service out of more than $1 million. And more companies like theirs, a pass-through entity,... Read more →
Your next "welcome to your new job" handshake could be at the Internal Revenue Service. (Photo: Unsplash+ in collaboration with Ahmet Kurt) A key part of the Internal Revenue Service's plan to increase taxpayer compliance is personnel. It takes people to track down and confirm they, or their businesses, owe taxes. So the IRS is looking to hire 3,700 employees nationwide. Specifically, the agency is seeking people, preferably experienced accountants, to serve as revenue agents. Revenue agent special skills: IRS revenue agents, known officially as Internal Revenue Agents, serve as technical experts in examinations of significant and complicated tax compliance... Read more →
Photo by Max Burchill on Unsplash To paraphrase a gazillion social media posts, exploitative people are why we can't have needed tax breaks. OK, Congress plays a big part. And the Internal Revenue Service too often steps on its own tax toes. But in many cases, unscrupulous people mess things up for the rest of us who are just trying to comply with tax laws and get a little bit of legitimate tax relief along the way. That's what happened with the Employee Retention Credit (ERC). This refundable tax credit was created by lawmakers to help businesses that were struggling... Read more →
The scheme involved false W-9 information, which meant the payor wasn't able to provide the owner of the artificial turf company, or the Internal Revenue Service, with the proper third-party report, allowing the man to evade nearly a million in federal tax. Until tax investigators caught up to him. Artificial grass has been dividing sports fans and players since its installation in Houston's iconic Astrodome in 1966. But fake grass is gaining ground among residential and smaller commercial customers. The market is forecast to reach $7 billion by 2025, as we deal with hotter temperatures, drought, and water sources literally... Read more →