This post is from the IRS Newswire:
New Email Phishing Scam
The IRS has been alerted to a new email phishing scam. The emails appear to be from the IRS Taxpayer Advocate Service and include a bogus case number and the following message:
“Your reported 2013 income is flagged for review due to a document processing error. Your case has been forwarded to the Taxpayer Advocate Service for resolution assistance. To avoid delays processing your 2013 filing contact the Taxpayer Advocate Service for resolution assistance.”
The recipient is directed to click on links that supposedly provide information about the “advocate” assigned to their case or that let them “review reported income.” The links lead to web pages that solicit personal information.
Taxpayers who get these messages should not respond to the email or click on the links. Instead, they should forward the scam emails to the IRS at firstname.lastname@example.org. For more information, visit the IRS’s Report Phishing web page.
The Taxpayer Advocate Service is a legitimate IRS organization that helps taxpayers resolve federal tax issues that have not been resolved through the normal IRS channels. The IRS, including TAS, does not initiate contact with taxpayers by email, texting or any social media.
in September 2013, the Department of the Treasury finalized rules for the capitalization of tangible property, with the purpose of clarifying the line between expenditures that should be deducted as repairs, and those that must be capitalized and depreciated. These new rules apply to every business taxpayer (sole proprietor-Schedule C, rental property- Schedule E, farmer-Schedule F) who acquires, produces, or improves tangible property, and are in effect for tax years beginning on or after 1/1/2014.
Up until yesterday, February 13, 2015 (yes, a Friday the 13th), the IRS position was that almost every taxpayer with a business or rental property should file Form 3115, Application for Change in Accounting Method, (a complex eight page form not including required explanations) with their 2014 tax returns and a duplicate copy to the IRS in Ogden, Utah.
After CPA firms have spent countless hours working to make sure our clients are compliant with these regulations, the IRS announced in Rev. Proc. 2015-20 that this complex filing may not be required for small businesses, including sole proprietors, with assets totaling less than $10 million or average annual gross receipts totaling $10 million or less.
For most taxpayers, this is a welcome relief.
For CPA’s, trying to follow the IRS regulations is like a dove hunt, it is really hard to hit (or comply in this case) with a moving target.
You have been receiving various tax documents over the past several weeks, W-2’s, mortgage interest statements, 1099’s from banks, etc. Can I file now?
Trying to file your 2015 tax return too early can lead to mistakes. Brokerage companies will not be sending their consolidated brokerage statements until February 15th. Many of these statements will have changes after the initial statements are mailed, especially if you invest in Real Estate Investment Trusts and Mutual funds.
Partnerships and S corporations and trusts generally do not issue their K-1’s usually until late February or sometime in March. Trust K-1s are often issued in late March or early April. The due dates for partnership and S corporation K-1s for extended returns is September 15th. Partnerships that invest in hedge funds generally cannot issue K-1s until September.
So, when do I bring my “tax stuff” to my CPA?
When you have most of your tax information together and have completed your tax organizer, then you should forward your information to you CPA. For many taxpayers, this will be sometime after February 15th. Don’t wait on the final K-1 that always comes in late March before you drop off your tax information. Late K-1s can easily be added to tax returns that are in process, CPA’s do this all the time.
If you have a student in college and will be completing a FAFSA Form, then you need to get your tax return information in as soon as you have gathered the bulk of it. Communicate to your CPA what is missing and your deadline for having numbers for the FAFSA form. The FAFSA can filed with tentative numbers and amended later.
Business personal property tax listings are due at the end of January. County tax offices use these listings to determine taxable value and to assess property taxes. Even though your business may have fully depreciated an asset, the county tax office still assigns a value to assets which may be up to 20% of the original cost. The county property tax assessors do not remove assets from their listing rolls unless you notify them that the asset is no longer in use.
Bottom line, if you have all assets on your depreciation schedules that you no longer own, you are paying more in property taxes than you should. Now is the time to review your depreciation schedules and remove those assets from your books and from your 2015 business personal property tax listings.
The Senate finally passed the 2014 Tax Extenders bill on December 16. Bill has significant benefits for businesses and individual taxpayers.
On December 16th, the Senate passed and sent to the President a $42 billion bill to extend dozens of expired tax credits and deductions retroactively for tax year 2014. Included in this bill is an increase in Section 179 expense to $500,000 (from $25,000), Bonus depreciation, and the ability to make charitable contributions from your IRA. Here is a summary of the tax provisions that are extended in the proposed legislation from RIA (common tax incentives have been highlighted) TIPA would extend the following individual provisions through 2014: • $250 above-the-line deduction for certain expenses of teachers (Code Sec. 62(a)(2)(D)); • Exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income; (Code Sec. 108(a)(1)(E)); • Parity for exclusion for employer-provided mass transit and parking benefits (Code Sec. 132(f)(2)); • Deduction for mortgage insurance premiums treated as qualified interest (Code Sec. 163(h)(3)(E)); • Deduction for state and local sales taxes (Code Sec. 164(b)(5)(I)); and • Above-the-line deduction for qualified tuition and related expenses. (Code Sec. 222(e)) TIPA would extend the following business provisions through 2014: • Research and experimentation credit (Code Sec. 41); • Low-income housing 9% credit rate freeze (extended for allocations made before Jan. 1, 2016) (Code Sec. 42); • Military housing allowance exclusion for determining whether a tenant in certain counties is low-income (section 3005 of 2008 Housing Assistance Tax Act); • Indian employment credit (Code Sec. 45A); • New markets tax credit (Code Sec. 45D); • Railroad track maintenance credit (Code Sec. 45G); • Mine rescue team training credit (Code Sec. 45N); • Employer wage credit for activated military reservists (Code Sec. 45P); • Work opportunity tax credit (Code Sec. 51); • Qualified zone academy bonds (Code Sec. 54E); • Classification of certain race horses as 3-year property (Code Sec. 168(e)(3)(A)); • 15-year straight line cost recovery for qualified leasehold property, qualified restaurant property, and qualified retail improvements (Code Sec. 168(e)(3)(E)); • 7-year recovery period for motorsports entertainment complexes (Code Sec. 168(i)(15)); • Accelerated depreciation for business property on Indian reservations (Code Sec. 168(j)); • 50% bonus depreciation (Code Sec. 168(k)); • Increase in expensing limit and in investment based phaseout amount and expanded definition of Section 179 property for certain real property (Code Sec. 179); • Election to expense mine safety equipment (Code Sec. 179E); • Special expensing rules for film and television production (Code Sec. 181(f)); • Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico (Code Sec. 199); • Modification of tax treatment of certain payments to controlling exempt organizations (Code Sec. 512); • Special treatment of certain dividends of regulated investment companies (RICs) (Code Sec. 871(k)); • RIC qualified investment entity treatment under FIRPTA (Code Sec. 897(h)); • Exceptions under Subpart F for active financing income (Code Sec. 953, Code Sec. 954); • Look-through treatment of payments between controlled foreign corporations (Code Sec. 954(c)(6)); • Special 100% gain exclusion for qualified small business stock (Code Sec. 1202); • Reduction in S corporation recognition period for built-in gains tax (Code Sec. 1374); • Empowerment zone tax incentives (Code Sec. 1391); • Temporary increase in limit on cover over of rum excise taxes to Puerto Rico and the Virgin Islands (Code Sec. 7652); and • American Samoa economic development credit. (section 19 of 2006 Tax Relief and Health Care Act) TIPA would extend the following charitable provisions through 2014: • Enhanced charitable deduction for contributions of food inventory (Code Sec. 170); • Basis adjustment to stock of S corporations making charitable contributions of property (Code Sec. 1367); • Special rules for contributions of capital gain real property for conservation purposes (Code Sec. 170(b)(1)(E), Code Sec. 170(b)(2)(B)); and • Tax-free distributions for charitable purposes from individual retirement account (IRA) accounts of taxpayers age 70 1/2 or older. (Code Sec. 408(d)(8)(F)) TIPA would extend the following energy provisions through 2014: • Credit for nonbusiness energy property (Code Sec. 25C); • Credit for second generation biofuel producer credit (Code Sec. 40(b)); • Incentives for biodiesel and renewable diesel (Code Sec. 40A); • Production credit for Indian coal facilities placed in service before 2009 (Code Sec. 45(e)(10)); • Credits with respect to facilities producing energy from certain renewable resources (Code Sec. 45(d)); • Credit for construction of energy efficient new homes (Code Sec. 45L); • Special allowance for second generation biofuel plant property (Code Sec. 168(l)); • Energy efficient commercial building deduction (Code Sec. 179D(h)); • Special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities (Code Sec. 451(i)); and • Incentives for alternative fuel and alternative fuel mixtures. (Code Sec. 6426, Code Sec. 6427) TIPA would extend the following provisions on multiemployer defined benefit pension plans through 2015: • Automatic extension of amortization periods (Code Sec. 431(d)(1)(C)); and • Shortfall funding method for plans in endangered or critical status. (sec. 221(c) of the Pension Protection Act of 2006, P.L. 109-280)
Currently, the Section 179 expense deduction for purchasing assets in 2014 is limited to $25,000. Many small businesses have used the Section 179 deduction to reduce their tax liabilities before the end of the year. Business owners may ask, what should I do if I need to purchase new equipment, buy it now or wait until January?
Two years ago, Congress extended the Section 179 limits in late December, actually passing the tax bill in January 2013 which was retroactive for all of 2012.
Who knows what will happen in the next five weeks before the end of the year.
If you are contemplating purchasing business assets before the end of the year, I would have everything in place to take delivery and place in service by the end of the year. Hopefully, Congress will take up these expired tax provisions in the next couple of weeks and make it retroactive for 2014. If not, you still get to take the current year regular depreciation deduction.