Author Archives: Kursti Nakagawa

New Healthcare Changes for Small Businesses – IRS

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New Healthcare Changes for Small Businesses

The Supreme Court recently settled a divided debate when it ruled that the Patient Protection and Affordable Care Act (PPACA) individual mandate is constitutional and that the “shared responsibility payment” is a tax. How will this affect you?

History

Beginning in 2014, the PPACA will require individuals to carry a minimum healthcare coverage for themselves and their dependents or they will have to pay a fee which is called a “shared responsibility payment.” Before the Supreme Court decision was made, the first definition stated the shared responsibility payment was a “penalty” for people who decided not to purchase health insurance under the required mandate. In this decision the Court decided that the mandate was constitutional because the payment was included in Congress’ immense power to tax. Therefore, the court decided that the required shared responsibility payment was indeed a tax.

How will this ruling affect you? If you have health insurance through a private provider or with Medicaid or Medicare, some unique groups, and individuals with low incomes will be exempt from the individual mandate. However, the Congressional Budget Office believes around 4 million U.S taxpayers will have to pay the mandate tax in 2014 when these provisions are executed. Most of these 4 million taxpayers are included in the 27 million small businesses in the United States. Due to the fact many small business owners are sometimes underinsured or uninsured. Therefore they will be a likely group that will be subject to the shared responsibility payment.

It seems that these added taxes could be quite substantial. The household income and family size will affect how much the taxpayer will owe. For example, when the mandate provision is fully implemented in 2016, the additional tax liability could be 2.5% of the family income or $695 for each uninsured adult, whichever is more, up to $12,500.

More on the Mandate Tax

Per the Supreme Court’s decision the shared responsibility payment will be a tax. Originally, the legislation labeled the individual mandate as a penalty. However, the Supreme Court did not want it to punishable by nature. However, one thing is certain: The IRS has the authority to assess and collect the tax.

It is still unknown how the IRS will administer the mandate tax. Usually the IRS sends notices to the taxpayers with unpaid balances. Then if the taxpayer does not pay the balance, the IRS transfers the account to collections, where they then can file liens and levies of wages, income, and certain financial accounts. However, it does seem the PPACA has given the IRS restricted authority on how it will collect the mandate tax.  Right now, under the current legislation, the IRS cannot send unpaid mandate tax balances to collection for enforcement, or can it issue liens or levies. The IRS will give out notices and offset refunds in order to collect the tax.

If you have tax debt you are unable to pay or any other questions our tax settlement professionals are happy to discuss you’re tax resolutions free of charge. For more information about our services, visit us today at www.professionalresolution.com. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation.

 

 

 

 

IRS Audit Focus for 2013

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The IRS constantly researches areas it needs to analyze and focus on each year. We are coming up to the start of the government’s fiscal year on October 1st, and the government has already announced areas that it will focus on for the coming year. When it comes to compliance, the IRS has begun to look closely at small business underreporting. Small business underreporting is responsible for 84% of the $450 billion tax gap. Below are some of the major highlights discussed by the IRS at the national and regional tax forum held this summer in regards to small business audits.

  Correct work reclassification Business classification can be an important interest to the IRS. The IRS realizes that businesses tend to incorrectly classify workers as independent contractors rather than employees, due to the fact independent contractors can cost about 30% less than an employee.

 Extra perks, especially the personal use of company cars – The IRS has noticed that employers are not reporting employee’s use of company vehicles on W-2’s or 1099’s. The IRS is also looking into all company cars especially, luxury autos, in its audits.

  High Wealth/High Income Taxpayers – The IRS classifies high wealth/ high income taxpayers as those who have a total positive income of more than $200,000 a year. In 2013 the IRS will focus on taxpayers with a total positive income of more than $1 million who file a schedule C business return in the last year

 Matching 1099-K Form – The IRS announced in 2013 that it plans to introduce a business-matching form program that will address a good amount of small business non-compliance.

 Small business employee health insurance credit, under Section 45R – This credit became first available in 2010 returns. However, now the IRS will examine small business employers and tax exempts for compliance with Section 45R eligibility requirements.

 Transactions being abused, especially international transactions – The IRS is actively looking for taxpayers who hide assets overseas. The IRS will also focus on offshore transactions for small and large businesses.

 If you have tax debt you are unable to pay or any other questions our tax settlement professionals are happy to discuss you’re tax resolutions free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com.   With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation

IRS Taxpayer Advocate Service Changes Case Acceptance Criteria

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The Taxpayer Advocate Service (TAS) is altering the measures it uses to accept cases from taxpayers that are having difficulty dealing with the Internal Revenue Service to lighten its caseload. The TSA has restricted its case admission criteria as budget cutbacks are taking a toll on the IRS.

The IRS sent a recent email to tax professionals. “The Taxpayer Advocate Service is designed to be a “safety net” for taxpayers who are experiencing problems with the IRS. However, because TAS cannot help all six million to twelve million taxpayers who may be having problems at any given time, it must focus on cases where it can add the most value.”

The email was then linked to a document listing four categories the TAS plans to focus on in accordance to the revised case acceptance criteria.

  1. Where a taxpayer is having financial hardship, emergency, or difficulty, and the IRS needs to move quicker than it usually does under normal circumstances.  Because if the IRS does not move quickly (i.e. to release a lien or remove a levy), the taxpayer will have even more financial difficulty.
  2. Where several different units and steps are required, and the case needs a “traffic cop” or “coordinator” to make sure everyone does their role. This is important for TAS to do.
  3. Where the taxpayer has tried to find a resolution through normal IRS portals, but they have not worked.
  4. Where the taxpayer is displaying unique issues or facts (legal issues included) and the IRS is not able to customize their approach.

“Last year, we assessed where our efforts have the greatest impact, and identified the four types of issues in which the IRS seemed to get the right answer (though slowly)”, said TAS. “Those cases involve the processing of original tax returns, amended returns, rejected and unstoppable returns, and injured (but not innocent spouse claims). We determined that TAS generally won’t accept cases involving pure processing issues so we could focus on higher-impact problems.”

“However, there are many exceptions to this policy. If the taxpayer is suffering an economic burden, TAS will take the case. If the case involves other issues, TAS will take the case. If the taxpayer is referred by a congressional office, TAS will take the case. And if the taxpayer specifically requests and insists, TAS will take the case.”

TAS has stated that it is trying to do its best to help tax preparers and taxpayers, but within limits. “We’ll continue striving to help tax professionals and their clients. But before you contact TAS, please remember that we are a finite resource that Congress created not to substitute for regular IRS procedures but to help taxpayers who need special attention.”

If you have tax debt you are unable to pay or any other questions our tax settlement professionals are happy to discuss you’re tax resolutions free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation

 

 

 

IRS Notice -Changes in Letter-Fowarding Policy for Missing Taxpayers

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The IRS has now made some new changes in its letter -forwarding services.  Under this new approach, the IRS has recently stated that they will not provide letter –forwarding services to locate a taxpayer that may be owed assets from an individual, company, or organization.  This is important news for missing taxpayers that may be entitled to a retirement plan or other financial benefits.

From now on the IRS expects individuals and companies to use the internet, such as missing person locator services, to find missing tax payers. Due to current budget constraints, the IRS has decided to halt the letter-forwarding program “AKA –free detective services.” “Since the release of this revenue procedure in 1994, several alternative missing person locator resources, including the internet, have become available,” it said. “Accordingly, the Service will no longer consider locating a missing taxpayer who may be entitled to a retirement plan or other financial benefit from an individual, company or organization to be a humane purpose for which the Service will provide letter-forwarding services.”

As a result, the letter forwarding program is limited to situations in which a person is trying to locate a taxpayer to convey a message for a humane purpose as defined in Section 4 or in an emergency situation.

If you have a concern in regards to IRS Notices or any other tax question(s), our tax settlement professionals can help you. For more information about our services, visit us today at www.professionaltaxresolution.com. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which option will be the best fit for your specific set of circumstances.

For more information about our tax resolution services, visit us today at www.professionaltaxresolution.com. Contact us by phone at 877-889-6257 to receive a free, no obligation consultation.