Summary: The House Committee on Ways and Means has approved a bill named the Tax Cuts and Job Act, dated November 6, 2017. It then passed in the House on November 16, 2017. Our opinion is that Congress can do a much better job and shouldn’t rush this bill. So, read below and you can be the judge of our thoughts. Congress appears eager to enact a major tax reform law that could potentially make fundamental changes in the way individuals and families calculate their federal income tax bill and the amount of federal tax that will be paid. However, will it pass the Senate, which has a different version, and be signed by President Trump? Based on Congress’ recent track record, the passing of the bill isn’t assured. This memorandum was written by Peter DeGregori, CPA, CGMA, and MST, based on his interpretation and summary of the section that effects business owners and individuals. This memo does not discuss the entire bill, nor does it provide summary or opinion on all sections. As you have read, there are some substantial tax changes and depending on where you live and how you earn your income, the proposed changes can either be advantageous or provide negative consequences. One should consider the proposed changes for possible change to your income tax strategy. Keep in mind, however, that while most experts expect a major tax law to be enacted this year, it’s by no means a sure bet. So, keep a close eye on the news and don’t act prematurely until the ink is dry on the President’s signature on the tax reform bill. For example, there are still multiple discussions of not passing a tax cut for the wealthy (they need to define wealthy) and the possible change of not allowing state and local taxes (SALT) to be deducted. The removal of the SALT deduction is a BIG issue for Congress and the Senate to discuss, which negatively effects taxpayers in states with high income taxes like California, New Jersey, Illinois, and New York. Some tax experts and economists, can argue that the deductions of state taxes are a way to adjust for the cost of living differences throughout the United States. Also, one must understand that one of the basic principles of tax law is to not double tax income, so one could argue taking away the SALT deduction goes against the basic principal of double taxation. Never-the-less, the proposal for the removal of SALT deduction is causing a BIG discussion. Most of the proposed changes below begin after 12/31/2017, which would mean the 2018 tax returns would be affected, but one must look at each specific provision of the final bill signed by the President to determine the effective date. Lower tax rates coming. Both the tax bill passed by the House of Representatives and the one before the Senate would reduce tax rates for many taxpayers, effective for the 2018 tax year. (Thus, the tax rates currently wouldn’t reduce […]

This is one of our quarterly newsletters, which are meant to help keep our clients up to date with various tax and business laws as well as tax planning opportunities.   Please take a moment to scan through the newsletter and contact us if you have any questions. Please click here to view. As a friendly reminder, the following deadlines are approaching: September 15th is the due date for individuals to pay the third quarter installment of 2016 tax and it is also the deadline for filing extended 2015 tax returns for calendar-year corporations, partnership and limited liability returns.  October 17th is the filing deadline for extended 2015 individual tax returns. We appreciate the opportunity to be of service to you.

This is one of our quarterly newsletters which are meant to help keep our clients up to date with various tax and business laws as well as tax planning opportunities. Inside this issue Learn how to manage your retirement accounts Be familiar with these retirement plan definitions Organize your business records to save time and money Are you in the crosshairs of the IRS? Read article here

Tax Business Newsletter – Summer 2015 This is one of our quarterly newsletters which are meant to help keep our clients up to date with various tax and business laws as well as tax planning opportunities. Inside this issue: How to get your business back on track Watch out for the “Dirty Dozen IRS Tax Notes Taxes & Marriage: The second time around Go forward or backward to utilize tax benefits Read article here.

Is it fair to say that most HNWIs and SMEs pay more tax than is necessary? How would individuals and companies be alerted to this scenario? In our experience, we see individuals and privately held companies paying too much income tax and not having a good understanding of the strategies and options that are available. If a taxpayer files a tax return and feels they are paying too much income tax, they should stop and get a second opinion. In our experience most tax preparers are not tax strategists. Are there particular state or federal taxes that could easily be reduced with timely professional advice? Each business is slightly different but there are a lot of similar strategies that privately held businesses can utilize. Surprisingly, we are seeing that tax returns are not prepared correctly and just that error creates an audit risk, which can consume time and money. We also see that businesses are not utilizing Research and Development Credit, the Domestic Production Activity Deduction and many other tax strategies that are available. In your experience, what are the typical problems that small businesses have regarding their accounting and income tax? When we meet with a new client, we first focus on their accounting and financial reporting. In our experience, this is the most critical piece of their business. This data provides the company with information to help them run their business, and make better business decisions. Too often we find that the accounting function isn’t running properly and we must fix that first. Good accounting is not only needed for management to run the business but it can be an integral component for tax planning, employee compensation, banking, government examination, and potential sale or IPO. Offshore trusts that are used for the purposes of tax mitigation have received bad press in recent years – what is your view on trusts used as a vehicle to offer lower taxes? It is a tool that can be part of a strategy if it makes sense for the taxpayer. Too often we see a professional suggesting an offshore trust or a complex strategy when we don’t feel it is necessary. How can tax saving initiatives be kept up to date, especially in light of changing legislation? What happens if a current tax plan is no longer viable because of legislative changes? Unfortunately, tax laws change often. Most tax strategists keep up on the tax law changes so they can perform their job well. We review our client’s tax strategy at a minimum annually. If there is a big tax change, then we review with each affected client. Many companies and individuals may wish to minimize tax liabilities, but are put off by potentially being challenged by the IRS? In reality is this the case? Is there increased risk by undertaking a tax mitigation plan? Certain tax treatments can increase the change of an examination. However, if the tax strategy is done correctly, then we suggest it as it is the law […]

Over the last 5 to 7 years, our office has unfortunately seen a steady increase in identity theft relating to US taxpayers accounts with the Internal Revenue Service (IRS). This causes issues with filing tax returns and receiving refunds. One of our clients that is in the IT industry sent us this article about how bad identity theft is with the IRS. We were familiar with some of these issues discussed in the article, but the issues seem to be greater. Thus we recommend you read the article at http://bit.ly/1DBadb5. This article is written by KrebsonSecurity (www.krebsonsecurity.com) which we have been informed is an authority on computer security. In addition to this article, we recommend the following steps. If a taxpayer has any identity theft they should complete IRS form 14039 which can be found at the IRS website at www.irs.gov. This form is a method for the IRS to increase security on your account. Recent identity theft occurrences should prompt a taxpayer to file this IRS form, even if they haven’t had identity theft with the IRS. For example, if you were informed by a large retailer that your information may have been hacked or was hacked and even if you haven’t seen any identity theft issues, you should file IRS form 14039, now! Another way of being alerted that your identity has been compromised with the IRS is when you electronically file your tax return and the IRS computers state the return won’t be accepted because it has already been filed. At this point, we strongly recommend you complete and remit IRS form 14039 quickly. You can speak with your tax preparer for more details, but filing this IRS form creates additional steps for protecting your identity with the IRS. Paying income taxes isn’t fun, and now we may have to deal with identity theft with the IRS.  Please contact us if you have any additional questions.