Updated COBRA Compliance Audit Guide
Wednesday, May 23, 2012
Wednesday, May 2, 2012
GAO reports confusion over foreign account reporting under FATCA and FBAR
GAO reports confusion over foreign account reporting under FATCA and FBAR
The U.S. government has been tightening its scrutiny of taxpayers who use foreign financial accounts to circumvent U.S. tax law. Last year the Treasury department imposed new requirements on taxpayers with financial interests in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account. Many taxpayers must now report information related to the foreign financial account to the IRS on a yearly basis by filing the “FBAR.”
Form 8939 v. FBAR: duplicated information
The Government Accountability Office (GAO) recently reported that duplication of some of the information requested on Form 8938, Statement of Specified Foreign Financial Assets, and Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), was creating confusion among taxpayers. Even though Form 8938 and the FBAR were developed to meet two different governmental needs (tax administration and law enforcement), FATCA reporting on Form 8938 may be duplicative in some instances of reporting on the FBAR
The IRS noted that individuals must file each form for which they meet the relevant reporting threshold. But for the sake of taxpayer convenience, the IRS recently posted a comparison chart of Form 8938 and FBAR requirements on its website www.irs.gov.
The chart addresses many of the important differences between the two forms including:
--Who is required to file each form?
--What U.S. territories are subject to the reporting requirements?
--What is the reporting threshold?
--When do you have an interest in an account or asset?
--What is reported?
--When is the form due?
The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The U.S. government can use the information it gleans from FBARs to identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
Contact Doeren Mayhew, a Michigan Tax and Accounting firm located in Michigan, for more information.
IRS Commissioner reviews priorities/accomplishments; will step down in September
IRS Commissioner reviews priorities/accomplishments; will step down in September
IRS Commissioner Shulman recently announced he plans to leave his position when his five-year term ends in September 2012. Speaking before the National Press Club this past April, Shulman also took the opportunity to review IRS progress during his tenure within numerous strategic areas, including computer technology modernization, tax return preparer standards, and offshore tax evasion. He urged the IRS to continue building on those improvements.
Commissioner Shulman reported that under his watch the IRS had succeeded in updating its weekly processing cycle for core accounts to a daily processing cycle. Information processed includes a taxpayer’s current account balance, outstanding amounts, and recent payments. The IRS is also developing its Customer Account Data Engine 2 (CADE-2) system, which is intended to speed tax return and refund processing.
Shulman also touted return preparer oversight as a recent accomplishment in which the IRS has implemented standards to ensure competency among paid tax return preparers. These regulations require paid return preparers—other than enrolled agents, attorneys, and CPAs—to register with the IRS, pass a competency exam, and complete 15 hours of continuing education from IRS-approved providers every year.
On the subject of international taxation, the Commissioner emphasized the successful Offshore Voluntary Disclosure Initiatives (OVDI). The programs have attracted more than 30,000 taxpayers to date and have collected more than $4.4 billion. Shulman also pointed to coordinated actions among taxing authorities on a global basis as the next step being taken to limit offshore tax evasion.
Contact Doeren Mayhew, a Michigan Accounting Firm, for more information.
IRS releases updated collection financial standards for ability-to-pay
IRS releases updated collection financial standards for ability-to-pay
The IRS has released its Collection Financial Standards for 2012. The Collection Financial Standards specify the amounts that taxpayers may claim as basic, necessary living expenses when they claim that paying their taxes will cause an undue hardship. The IRS also applies the standards when taxpayers ask for an extension of time to pay the tax shown on their return.
Food and clothing
The new national standards specify monthly dollar figures for the amount of necessary food, clothing, housekeeping supplies, and miscellaneous expenses that may be taken into account while determining a taxpayer's ability to pay its delinquent taxes. Taxpayers are allowed the total national standard amount, even if it is higher than the amount actually spent. The national standards for food, clothing and other related items range from $565 per month for one to $1,450 per month for a family of four (up from $535 to $1,377 in 2011). For each additional person above four, taxpayers may add $281 to the four-person allowance (up from $262 in 2011).
Taxpayers must provide documentation to substantiate expenses exceeding the national standard amount. For miscellaneous expenses, the taxpayer must use the standard amount. In general, the number of people used to arrive at the correct national standard should be the same number of exemptions claimed on a taxpayer's most recent tax return.
With respect to food expenses, the IRS has clarified that:
• Food includes food at home and food away from home;
• Food at home refers to the total expenditures for food from grocery stores or other food stores, but excludes the purchase of nonfood items;
• Food away from home includes all meals and snacks, including tips, at fast-food, take-out, delivery and full-service restaurants.
Other expenses included in this category and subject to the national standards are: housekeeping supplies (i.e. laundry, cleaning, stationery, and lawn and garden products), apparel and services clothing (i.e. clothes, shoes, material, clothing rental, dry cleaning, and jewelry), and personal care products (i.e. hair, oral hygiene, shaving needs, and cosmetics).
Out-of-pocket health care expenses
The national standard for out-of-pocket health care costs is unchanged from 2011. The standard amount remains $60 per month for individuals under age 65 and $144 per month for individuals age 65 and older.
Out-of-pocket health care expenses include medical services, prescription drugs, and medical supplies. Health insurance premiums are excluded from this category. Taxpayers and their dependents are allowed the standard amount monthly on a per person basis, without questioning the amounts they actually spend.
Housing and utilities
The national housing and utilities standards include mortgage or rent, property taxes, and maintenance, along with gas, electric, water, heating oil, garbage collection, telephone service, cell phone service, cable television, and Internet service. The standard amount for housing and utilities is computed based on the state and county where the taxpayer resides and the taxpayer's family size. For example, a family of five residing in the District of Columbia would have a standard amount of $2,913 (or the actual amount of housing and utility costs, if less than $2,913). A family of five residing in Buffalo County, South Dakota would have a standard amount of $1,369.
Additional sample table figures, among the hundreds posted, include the following amounts (one person/5 or more):
- Arlington County, Va.: $2283/$3201
- East Carroll Parish, La.: $922/$1,293
- Howard County, Md.: $2,266/$3,177
- Hunterdon County, N.J.: $2,570/$3,603
- Maverick County, Tex.: $1,063/$1,491
- New York County, N.Y.: $4,076/$5,716
- Orange County, Ca.: $2,448/$3,432
- Owsley County, Ky.: $819/$1,148
- Wilcox County, Ala.: $987/$1384
This year the standards for the following U.S. territories were eliminated: American Samoa, Guam, Northern Mariana Islands, and the Virgin Islands. National standards are provided for Puerto Rico.
Transportation
The transportation standards for taxpayers with a vehicle take into account monthly loan or lease payments and monthly operating costs. The IRS uses a single nationwide allowance for public transportation. If a taxpayer owns a vehicle and uses public transportation, expenses may be allowed for both, subject to certain rules. The 2012 nationwide allowance for public transportation expenses is $182 per month, per household.
The allowance for car ownership is $517 per month for one car and $1034 per month for two cars. A single taxpayer generally is allowed an allowance for one automobile. If a taxpayer's monthly lease or loan payment is less than the ownership cost allowance, the taxpayer must use that lesser amount. If a taxpayer has no lease or car loan payment, the allowance for ownership costs is $0.
For car owners, the national standards provide different standard allowances for operating costs, depending on what region of the United States the taxpayer resides in. Operating costs include expenses for maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking, and tolls. They do not include personal property taxes.
Additional sample figures for operating costs in the following regions include (one car/two cars):
- New York: $342/$554
- Chicago: $262/$524
- Dallas–Ft. Worth: $277/$554
- Detroit: $295/$590
- Los Angeles: $295/$590
- Miami: $346/$692
- Washington, DC: $270/$540
Conclusion
Taxpayers who are faced with making a late payment of taxes may incur interest and penalties, but there are alternatives available. For some of these alternatives, the IRS will look at the taxpayer's financial situation, and it may apply its Collection Financial Standards to determine what taxpayer expenses are justified and what the taxpayer can reasonably pay to the IRS.
Please contact Doeren Mayhew, Tax Professionals in Michigan, for more information.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. |
2012 tax season ends quietly
2012 tax season ends quietly
The 2011 filing season ended quietly, apart from a few IRS reminders and last-minute tips issued just before the April 17 deadline. Practitioners generally agreed with the government’s assessment that there were no big misfires this tax season. The IRS reported no problems with the processing of returns apart from a few delays in processing refunds in the early portion of the filing season. The delays resulted from improvements the IRS was making to its e-filing systems designed to prevent refund fraud. The IRS also continued to implement its Modernized e-File (MeF) program, which has been successful thus far.
On April 16, the Treasury Inspector General for Tax Administration J. Russell George gave the IRS good marks for its performance during the 2012 filing season. Speaking with reporters, George said that the agency has worked diligently to detect tax fraud. However, George said that budgetary constraints have resulted in longer wait times for taxpayers to speak with IRS customer service representatives. George highlighted the IRS’s performance in a new report by TIGTA, “Interim Results of the 2012 Filing Season,” released on April 16.
Contact Doeren Mayhew, a Michigan Tax and Audit firm, for more information.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. |
IRS eases up on local lodging deduction for employees
| Doeren Mayhew | |
IRS eases up on local lodging deduction for employees
The IRS has issued proposed “reliance” regulations that allow an employee’s deduction for local lodging that is business-related. Although the proposed regulations are technically not fully effective until published as final regulations, they allow taxpayers to deduct local lodging expenses under Code Sec. 162 (trade or business expenses) if the statute of limitations has not expired for the year of the deduction. In effect, the new rules are effective immediately. Background While job-related expenses for travel away from home may be deductible as trade or business expenses, the income tax regulations historically have disallowed the employee’s deduction for local lodging (described as lodging that is not incurred in traveling away from home). However, in 2007, the IRS announced it would amend the regulations to change this rule. In the meantime, it would not challenge an employee’s deduction for temporary local lodging that was necessary for the employee to participate in a business function. The new reliance regulations go even further, with more specifics that liberalize the rules. Requirements The new regulations provide that whether local lodging expenses are incurred in carrying on a taxpayer’s trade or business is determined under all the facts and circumstances. The regulations provide numerous examples of costs that would be deductible under these rules covering such situations as team training, late night projects, and rotating on-duty shifts. The new regulations also provide the following safe harbor for an employee to deduct local lodging expenses:
These new rules are good news for employees, as well as for employers that want their employees relieved of any tax burden when they are needed for special assignments. If you would like to discuss whether you have any expenses that qualify for this new deduction, please contact Doeren Mayhew, a Michigan CPA firm, for more information.
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MI - Corporation president liable as responsible officer
MI - Corporation president liable as responsible officer
The Michigan Tax Tribunal held that a petitioner was liable for the corporate taxpayer's sales tax assessments based on his status as a responsible corporate officer. Evidence showed that the petitioner served as the president of the taxpayer during the periods at issue and never resigned as an officer of the corporation. Furthermore, as the petitioner prepared the corporation's tax returns in prior years and failed to affirmatively surrender this responsibility, it could be inferred that he was the officer with control over making the returns and payments during the periods in question. The delegation of tax responsibilities to non-officers does not extinguish the responsibility of a corporate officer. Klecha v. Department of Treasury, Michigan Tax Tribunal, No. 357723, March 28, 2012
Contact Doeren Mayhew, a Michigan Audit firm, for more information.
Time for post-filing season checkup
Doeren Mayhew
Time for post-filing season checkup
Your 2011 tax return has been filed, or you have properly filed for an extension. In either case, now it's time to start thinking about important post-filing season activities to save you tax in 2012 and beyond. A few loose ends may pay dividends if you take care of them sooner instead of later.
Successful filing season
The IRS reported that the 2012 filing season moved along without significant problems. The IRS continued to upgrade its return processing programs and systems. Early in the filing season, some filers experienced a short delay in receiving refunds but the delay was quickly resolved. The IRS reported just before the end of the filing season that it had processed nearly 100 million returns and issued 75 million refunds.
Extensions
Individuals are eligible for an automatic six-month extension until October 15 to file a return. To get the extension, taxpayers must estimate their tax liability and pay any amount due. When a taxpayer properly files for an extension, he or she avoids the late-filing penalty, generally five percent per month based on the unpaid balance, which applies to returns filed after the April 17 deadline. Any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 17. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.
Installment agreements
Installment agreements generally can be set up quickly with the IRS and help to spread out payments to make them more management. In 2012, the IRS increased the threshold for a streamlined installment agreement from $25,000 to $50,000. Installment agreements however, come with some costs. The IRS charges a fee to set up an installment agreement. If you cannot pay the full amount within 120 days, the fee for setting up an agreement is:
$52 for a direct debit agreement;
$105 for a standard agreement or payroll deduction agreement; or
$43 for qualified lower income taxpayers.
It's important to make your scheduled payments timely and in full. The IRS expects you to pay the minimum amount agreed on; you can always pay more if you are able. If your installment agreement goes into default, the IRS can charge a reinstatement fee.
An installment agreement does not reduce the amount of the taxes, interest, or penalties owed, and penalties and interest will continue to accrue. In determining the amount of the penalty for failure to pay tax, the penalty is reduced from 0.5 percent per month to 0.25 percent per month during any month that an installment agreement for the unpaid tax is in effect.
You must specify the amount you can pay and the day of the month (1st-28th) on which you wish to make your payment each month. The IRS expects to receive your payment on the date you select. The IRS will respond to your request, usually within 30 days, to advise you as to whether your request has been approved or denied, or if more information is needed.
Amended returns
Taxpayers can file an amended return if they find an error, uncover unreported income or discover an item that will generate a deduction. Amended returns are filed on Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, Form 1040A, Form 1040EZ, Form 1040NR, or Form 1040NR-EZ. If you are filing to claim an additional refund, wait until you have received your original refund. If you owe additional tax for a tax year for which the filing date has not passed, file Form 1040X and pay the tax by the filing date for that year to avoid penalties and interest.
Generally, to claim a refund, Form 1040X must be filed within 3 years from the date of your original return or within two years from the date you paid the tax, whichever is later. Returns filed before the due date (without regard to extensions) are considered filed on the due date. Taxpayers must file a separate Form 1040X for each year they are amending.
Targeted penalty relief
This year - for the first time - the IRS offered penalty relief to qualified individuals who were unable to pay their taxes by the April 17 deadline. Unemployed filers and self-employed individuals whose business income dropped substantially can apply for a six-month extension of time to pay, the IRS explained. Eligible taxpayers will not be charged a late-payment penalty if they pay any tax, penalty and interest due by October 15, 2012. Taxpayers qualify if they were unemployed for any 30-day period between January 1, 2011 and April 17, 2012. Self-employed people qualify if their business income declined 25 percent or more in 2011, due to the economy. However, income limits apply, which excluded many taxpayers from the program.
Records
The IRS advises that taxpayers maintain tax records for three years. In many cases, especially for individuals with complex returns, records should be kept longer. Our office maintains taxpayer records with the utmost care and confidentiality.
We encourage you to contact Doeren Mayhew, a Michigan Audit firm, if you have any questions about the end of the 2011 filing season and how your 2011 return can provide a roadmap to tax savings in 2012.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Time for post-filing season checkup
Your 2011 tax return has been filed, or you have properly filed for an extension. In either case, now it's time to start thinking about important post-filing season activities to save you tax in 2012 and beyond. A few loose ends may pay dividends if you take care of them sooner instead of later.
Successful filing season
The IRS reported that the 2012 filing season moved along without significant problems. The IRS continued to upgrade its return processing programs and systems. Early in the filing season, some filers experienced a short delay in receiving refunds but the delay was quickly resolved. The IRS reported just before the end of the filing season that it had processed nearly 100 million returns and issued 75 million refunds.
Extensions
Individuals are eligible for an automatic six-month extension until October 15 to file a return. To get the extension, taxpayers must estimate their tax liability and pay any amount due. When a taxpayer properly files for an extension, he or she avoids the late-filing penalty, generally five percent per month based on the unpaid balance, which applies to returns filed after the April 17 deadline. Any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 17. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.
Installment agreements
Installment agreements generally can be set up quickly with the IRS and help to spread out payments to make them more management. In 2012, the IRS increased the threshold for a streamlined installment agreement from $25,000 to $50,000. Installment agreements however, come with some costs. The IRS charges a fee to set up an installment agreement. If you cannot pay the full amount within 120 days, the fee for setting up an agreement is:
$52 for a direct debit agreement;
$105 for a standard agreement or payroll deduction agreement; or
$43 for qualified lower income taxpayers.
It's important to make your scheduled payments timely and in full. The IRS expects you to pay the minimum amount agreed on; you can always pay more if you are able. If your installment agreement goes into default, the IRS can charge a reinstatement fee.
An installment agreement does not reduce the amount of the taxes, interest, or penalties owed, and penalties and interest will continue to accrue. In determining the amount of the penalty for failure to pay tax, the penalty is reduced from 0.5 percent per month to 0.25 percent per month during any month that an installment agreement for the unpaid tax is in effect.
You must specify the amount you can pay and the day of the month (1st-28th) on which you wish to make your payment each month. The IRS expects to receive your payment on the date you select. The IRS will respond to your request, usually within 30 days, to advise you as to whether your request has been approved or denied, or if more information is needed.
Amended returns
Taxpayers can file an amended return if they find an error, uncover unreported income or discover an item that will generate a deduction. Amended returns are filed on Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, Form 1040A, Form 1040EZ, Form 1040NR, or Form 1040NR-EZ. If you are filing to claim an additional refund, wait until you have received your original refund. If you owe additional tax for a tax year for which the filing date has not passed, file Form 1040X and pay the tax by the filing date for that year to avoid penalties and interest.
Generally, to claim a refund, Form 1040X must be filed within 3 years from the date of your original return or within two years from the date you paid the tax, whichever is later. Returns filed before the due date (without regard to extensions) are considered filed on the due date. Taxpayers must file a separate Form 1040X for each year they are amending.
Targeted penalty relief
This year - for the first time - the IRS offered penalty relief to qualified individuals who were unable to pay their taxes by the April 17 deadline. Unemployed filers and self-employed individuals whose business income dropped substantially can apply for a six-month extension of time to pay, the IRS explained. Eligible taxpayers will not be charged a late-payment penalty if they pay any tax, penalty and interest due by October 15, 2012. Taxpayers qualify if they were unemployed for any 30-day period between January 1, 2011 and April 17, 2012. Self-employed people qualify if their business income declined 25 percent or more in 2011, due to the economy. However, income limits apply, which excluded many taxpayers from the program.
Records
The IRS advises that taxpayers maintain tax records for three years. In many cases, especially for individuals with complex returns, records should be kept longer. Our office maintains taxpayer records with the utmost care and confidentiality.
We encourage you to contact Doeren Mayhew, a Michigan Audit firm, if you have any questions about the end of the 2011 filing season and how your 2011 return can provide a roadmap to tax savings in 2012.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Countdown to Supreme Court's health care decision
Doeren Mayhew
Countdown to Supreme Court's health care decision
After three days of oral arguments in March, the Supreme Court is deciding the fate of the Pension Protection and Affordable Care Act (PPACA) and its companion law, the Health Care and Education Reconciliation Act (HCERA). Not only do the new laws impact health care, they contain numerous tax provisions, many of which have yet to take effect. The Supreme Court may uphold the laws, strike them down in whole or in part, or decide that the case is premature. The Supreme Court is expected to render its decision in June. In the meantime, a quick checklist of the tax provisions in the two laws reveals how extensively they impact individuals, businesses and taxpayers of all types.
Challenges
Congress passed, and President Obama signed, the PPACA and HCERA in 2010. Almost immediately, several states and taxpayers challenged the laws in court. The lawsuits generally argued that Congress had exceeded its authority by requiring individuals to obtain health insurance.
The cases made their way from federal district courts to the various federal courts of appeal, which reached different conclusions. One circuit court invalidated the individual mandate; two circuit courts upheld the individual mandate and another circuit court dismissed the challenge on procedural grounds.
Supreme Court grants review
On November 14, 2011, the United States Supreme Court agreed to review the Eleventh Circuit Court's decision in Florida v. U.S. Department of Health and Human Services. The Supreme Court stated it would examine four issues: (1) the Constitutionality of the individual mandate; (2) whether the individual mandate is severable from the PPACA; (3) whether the challenge to the individual mandate is barred by the Anti-Injunction Act; and (4) whether PPACA's expansion of Medicaid exceeded Congress's authority. The Supreme Court heard oral arguments in the case on March 26-28 in Washington, D.C.
Individual mandate and penalty
The individual mandate generally requires individuals to maintain minimum essential coverage for themselves and their dependents after 2013. Individuals will be required to pay a penalty for each month of noncompliance, unless they are exempt (such as individuals covered by Medicaid and Medicare). The PPACA also provides tax incentives to help individuals obtain minimum essential coverage. Beginning in 2014, individuals with incomes within certain federal poverty thresholds may qualify for a refundable health insurance premium assistance tax credit. The PPACA also provides for advance payment of the credit.
In Florida v. HHS, the Eleventh Circuit struck down the individual health insurance mandate but did not declare the entire PPACA unconstitutional. In contrast, the Sixth Circuit held that the individual mandate was a valid exercise of Congress' power to regulate commerce (Thomas More Law Center v. Obama). The Court of Appeals for the District of Columbia Circuit also upheld the individual mandate (Mead v. Holder). The Supreme Court could find the entire PPACA unconstitutional or could find that the individual mandate is severable, thereby preserving other parts of the statute, including various tax provisions.
Tax provisions
While much attention has focused on the individual mandate, the Supreme Court may also decide the fate of many tax provisions in the PPACA and the HCERA. Among the tax provisions potentially affected by the Supreme Court's decision are:
Code Sec. 45R small employer health insurance tax credit;
3.8 percent Medicare contribution tax on unearned income for higher income taxpayers after 2012;
Additional 0.9 percent Medicare tax on wages and self-employment income of higher income taxpayers after 2012;
Increased itemized deduction for unreimbursed medical expenses after 2012;
Prohibition on over-the-counter medicines being eligible for health flexible spending arrangement (FSA), health reimbursement arrangement (HRA), health savings account (HSA), and Archer Medical Savings Account (MSA) dollars.
Additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses;
Excise tax on high-dollar health plans after 2017;
Tax credit for therapeutic discovery projects;
Annual fees on manufacturers and importers of branded prescription drugs;
Reporting of employer-provided health coverage on Form W-2;
Codification of the economic substance doctrine.
Anti-Injunction Act
The Supreme Court could decide that the challenge to the PPACA is premature. Under the Anti-Injunction Act, a taxpayer must wait to oppose a tax until after it is collected. The PPACA's individual mandate and its related penalty do not take effect until 2014. The Fourth Circuit Court of Appeals found that the penalty amounted to a tax and taxpayers could not challenge the tax until it took effect (Liberty University v. Geithner).
If you have any questions about the tax provisions in the health care reform laws, please contact Doeren Mayhew, a Michigan Audit Firm, for more information. We will be following developments as they ensue after the Supreme Court issues its decision in June.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Countdown to Supreme Court's health care decision
After three days of oral arguments in March, the Supreme Court is deciding the fate of the Pension Protection and Affordable Care Act (PPACA) and its companion law, the Health Care and Education Reconciliation Act (HCERA). Not only do the new laws impact health care, they contain numerous tax provisions, many of which have yet to take effect. The Supreme Court may uphold the laws, strike them down in whole or in part, or decide that the case is premature. The Supreme Court is expected to render its decision in June. In the meantime, a quick checklist of the tax provisions in the two laws reveals how extensively they impact individuals, businesses and taxpayers of all types.
Challenges
Congress passed, and President Obama signed, the PPACA and HCERA in 2010. Almost immediately, several states and taxpayers challenged the laws in court. The lawsuits generally argued that Congress had exceeded its authority by requiring individuals to obtain health insurance.
The cases made their way from federal district courts to the various federal courts of appeal, which reached different conclusions. One circuit court invalidated the individual mandate; two circuit courts upheld the individual mandate and another circuit court dismissed the challenge on procedural grounds.
Supreme Court grants review
On November 14, 2011, the United States Supreme Court agreed to review the Eleventh Circuit Court's decision in Florida v. U.S. Department of Health and Human Services. The Supreme Court stated it would examine four issues: (1) the Constitutionality of the individual mandate; (2) whether the individual mandate is severable from the PPACA; (3) whether the challenge to the individual mandate is barred by the Anti-Injunction Act; and (4) whether PPACA's expansion of Medicaid exceeded Congress's authority. The Supreme Court heard oral arguments in the case on March 26-28 in Washington, D.C.
Individual mandate and penalty
The individual mandate generally requires individuals to maintain minimum essential coverage for themselves and their dependents after 2013. Individuals will be required to pay a penalty for each month of noncompliance, unless they are exempt (such as individuals covered by Medicaid and Medicare). The PPACA also provides tax incentives to help individuals obtain minimum essential coverage. Beginning in 2014, individuals with incomes within certain federal poverty thresholds may qualify for a refundable health insurance premium assistance tax credit. The PPACA also provides for advance payment of the credit.
In Florida v. HHS, the Eleventh Circuit struck down the individual health insurance mandate but did not declare the entire PPACA unconstitutional. In contrast, the Sixth Circuit held that the individual mandate was a valid exercise of Congress' power to regulate commerce (Thomas More Law Center v. Obama). The Court of Appeals for the District of Columbia Circuit also upheld the individual mandate (Mead v. Holder). The Supreme Court could find the entire PPACA unconstitutional or could find that the individual mandate is severable, thereby preserving other parts of the statute, including various tax provisions.
Tax provisions
While much attention has focused on the individual mandate, the Supreme Court may also decide the fate of many tax provisions in the PPACA and the HCERA. Among the tax provisions potentially affected by the Supreme Court's decision are:
Code Sec. 45R small employer health insurance tax credit;
3.8 percent Medicare contribution tax on unearned income for higher income taxpayers after 2012;
Additional 0.9 percent Medicare tax on wages and self-employment income of higher income taxpayers after 2012;
Increased itemized deduction for unreimbursed medical expenses after 2012;
Prohibition on over-the-counter medicines being eligible for health flexible spending arrangement (FSA), health reimbursement arrangement (HRA), health savings account (HSA), and Archer Medical Savings Account (MSA) dollars.
Additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses;
Excise tax on high-dollar health plans after 2017;
Tax credit for therapeutic discovery projects;
Annual fees on manufacturers and importers of branded prescription drugs;
Reporting of employer-provided health coverage on Form W-2;
Codification of the economic substance doctrine.
Anti-Injunction Act
The Supreme Court could decide that the challenge to the PPACA is premature. Under the Anti-Injunction Act, a taxpayer must wait to oppose a tax until after it is collected. The PPACA's individual mandate and its related penalty do not take effect until 2014. The Fourth Circuit Court of Appeals found that the penalty amounted to a tax and taxpayers could not challenge the tax until it took effect (Liberty University v. Geithner).
If you have any questions about the tax provisions in the health care reform laws, please contact Doeren Mayhew, a Michigan Audit Firm, for more information. We will be following developments as they ensue after the Supreme Court issues its decision in June.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Congress eyes retirement savings plans in push toward tax reform
Doeren Mayhew
Congress eyes retirement savings plans in push toward tax reform
Proposals to reform retirement savings plans were highlighted during an April 2012 hearing by the House Ways and Means Committee. Lawmakers were advised by many experts to move slowly on making changes to current retirement programs that might discourage employers from sponsoring plans for their workers. Nevertheless, it is clear that Congress wants to make some bold moves in the retirement savings area of the tax law and that likely it will do so under the broader umbrella of general "tax reform." While tax reform is gaining momentum, it is unlikely to produce any change in the tax laws until 2013 or 2014. Considering that retirement planning necessarily looks long-term into the future, however, now is not too soon to pay some attention to the proposals being discussed.
Testimony
The Chief of Actuarial Issues and Director of Retirement Policy for the American Society of Pension Professionals and Actuaries testified that current federal tax incentives can transform taxable bonuses for business owners into retirement savings contributions that benefit both owners and employees. "This incentive for the business owner to contribute for other employees results in a distribution of tax benefit that is more progressive than the current income tax structure," she observed.
An American Benefits Council representation warned at the hearing that the wisest course for lawmakers is to not enact new laws that would disrupt the success of the current system. Short-term retirement legislation designed to boost tax revenues generally do so by eliminating the existing savings incentives and eroding the amount that workers actually save.
Committee Chairman Dave Camp, R-Mich. questioned whether the large number of retirement plans now existing with their different rules and eligibility criteria leads to confusion, reducing the effectiveness of the incentives in increasing retirement savings. Ranking member Sander Levin, D-Mich., questioned the value of making tax reform-inspired changes to retirement plans. "Tax reform should approach retirement savings incentives with an eye toward strengthening our current system and expanding participation, not as an opportunity to find revenue," Levin said.
JCT report
In advance of the hearing, the Joint Committee on Taxation (JCT) summarized the tax treatment of current-law retirement savings plans and described some recent reform proposals in a report, "Present Law and Background Relating to the Tax Treatment of Retirement Savings" (JCX-32-12). The report highlighted several of the recent proposals on retirement savings:
Automatic enrollment payroll deduction IRA. President Obama has proposed mandatory automatic enrollment payroll deduction IRA programs. An employer that does not sponsor a qualified retirement plan, SEP, or SIMPLE IRA plan for its employees (or sponsors a plan and excludes some employees) would be required to offer an automatic enrollment payroll deduction IRA program with a default contribution to a Roth IRA of three percent of compensation. An employer would not be required to offer the program if the employer has been in existence less than two years or has 10 or fewer employees.
Expand the saver's credit. The Administration has also proposed to make the retirement savings contribution credit, known as the saver's credit, fully refundable and for the saver's credit to be deposited automatically in an employer-sponsored retirement plan account or IRA to which the eligible individual contributes. In addition, in place of the current credit ranging from 10 percent to 50 percent for qualified retirement savings contributions up to $2,000 per individual, the proposal would provide a credit of 50 percent of such contributions up to $500 (indexed for inflation) per individual.
Consolidate plans. The JCT also reviewed two retirement proposals from the Bush administration: Consolidating traditional and Roth IRAs into a single type of account called Retirement Savings Accounts (RSAs) and creating Lifetime Savings Accounts (LSAs) that could be used to save for any purpose with an annual limit for contributions of $2,000. The JCT explained that the tax treatment of RSAs and LSAs would be similar to the current tax treatment of Roth IRAs (contributions would not be deductible, and earnings on contributions generally would not be taxable when distributed). Additionally, the Bush Administration had proposed to consolidate various current-law employer-sponsored retirement arrangements under which individual accounts are maintained for employees and under which employees may make contributions into a single type of arrangement called an employer retirement savings account (ERSA).
The American Society of Pension Professionals and Actuaries (ASPPA) told the Ways and Means Committee that the large number of plans with different rules and criteria does not reduce the effectiveness of the incentives in increasing retirement savings. "Consolidating all types of defined-contribution type plans into one type of plan would not be simplification," the ASPPA cautioned. "It would disrupt savings, and force state and local governments and nonprofits to modify their retirement savings plans and procedures."
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Contact Doeren Mayhew, a Michigan CPA Firm, for more information.
Congress eyes retirement savings plans in push toward tax reform
Proposals to reform retirement savings plans were highlighted during an April 2012 hearing by the House Ways and Means Committee. Lawmakers were advised by many experts to move slowly on making changes to current retirement programs that might discourage employers from sponsoring plans for their workers. Nevertheless, it is clear that Congress wants to make some bold moves in the retirement savings area of the tax law and that likely it will do so under the broader umbrella of general "tax reform." While tax reform is gaining momentum, it is unlikely to produce any change in the tax laws until 2013 or 2014. Considering that retirement planning necessarily looks long-term into the future, however, now is not too soon to pay some attention to the proposals being discussed.
Testimony
The Chief of Actuarial Issues and Director of Retirement Policy for the American Society of Pension Professionals and Actuaries testified that current federal tax incentives can transform taxable bonuses for business owners into retirement savings contributions that benefit both owners and employees. "This incentive for the business owner to contribute for other employees results in a distribution of tax benefit that is more progressive than the current income tax structure," she observed.
An American Benefits Council representation warned at the hearing that the wisest course for lawmakers is to not enact new laws that would disrupt the success of the current system. Short-term retirement legislation designed to boost tax revenues generally do so by eliminating the existing savings incentives and eroding the amount that workers actually save.
Committee Chairman Dave Camp, R-Mich. questioned whether the large number of retirement plans now existing with their different rules and eligibility criteria leads to confusion, reducing the effectiveness of the incentives in increasing retirement savings. Ranking member Sander Levin, D-Mich., questioned the value of making tax reform-inspired changes to retirement plans. "Tax reform should approach retirement savings incentives with an eye toward strengthening our current system and expanding participation, not as an opportunity to find revenue," Levin said.
JCT report
In advance of the hearing, the Joint Committee on Taxation (JCT) summarized the tax treatment of current-law retirement savings plans and described some recent reform proposals in a report, "Present Law and Background Relating to the Tax Treatment of Retirement Savings" (JCX-32-12). The report highlighted several of the recent proposals on retirement savings:
Automatic enrollment payroll deduction IRA. President Obama has proposed mandatory automatic enrollment payroll deduction IRA programs. An employer that does not sponsor a qualified retirement plan, SEP, or SIMPLE IRA plan for its employees (or sponsors a plan and excludes some employees) would be required to offer an automatic enrollment payroll deduction IRA program with a default contribution to a Roth IRA of three percent of compensation. An employer would not be required to offer the program if the employer has been in existence less than two years or has 10 or fewer employees.
Expand the saver's credit. The Administration has also proposed to make the retirement savings contribution credit, known as the saver's credit, fully refundable and for the saver's credit to be deposited automatically in an employer-sponsored retirement plan account or IRA to which the eligible individual contributes. In addition, in place of the current credit ranging from 10 percent to 50 percent for qualified retirement savings contributions up to $2,000 per individual, the proposal would provide a credit of 50 percent of such contributions up to $500 (indexed for inflation) per individual.
Consolidate plans. The JCT also reviewed two retirement proposals from the Bush administration: Consolidating traditional and Roth IRAs into a single type of account called Retirement Savings Accounts (RSAs) and creating Lifetime Savings Accounts (LSAs) that could be used to save for any purpose with an annual limit for contributions of $2,000. The JCT explained that the tax treatment of RSAs and LSAs would be similar to the current tax treatment of Roth IRAs (contributions would not be deductible, and earnings on contributions generally would not be taxable when distributed). Additionally, the Bush Administration had proposed to consolidate various current-law employer-sponsored retirement arrangements under which individual accounts are maintained for employees and under which employees may make contributions into a single type of arrangement called an employer retirement savings account (ERSA).
The American Society of Pension Professionals and Actuaries (ASPPA) told the Ways and Means Committee that the large number of plans with different rules and criteria does not reduce the effectiveness of the incentives in increasing retirement savings. "Consolidating all types of defined-contribution type plans into one type of plan would not be simplification," the ASPPA cautioned. "It would disrupt savings, and force state and local governments and nonprofits to modify their retirement savings plans and procedures."
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Contact Doeren Mayhew, a Michigan CPA Firm, for more information.
How do I: Compute Code Sec. 1231 gains and losses?
Doeren Mayhew
How do I: Compute Code Sec. 1231 gains and losses?
Code Sec. 1231 applies to gains and losses from property used in the trade or business and from involuntary conversions. Normally, you have to determine whether property is a capital asset or is ordinary income property. Property generally can't be both. However, Code Sec. 1231 allows you to "have it" both ways. Any gains are taxed at low capital gains rates (generally 15 percent for 2012), and any losses are treated as ordinary losses, taxable at more favorable ordinary loss rates, and available (without limit) to offset other ordinary income.
Who qualifies?
Code Sec. 1231 gains include:
--Recognized gains on the sale or exchange of property used in the trade or business; and
--Recognized gains from the involuntary or compulsory conversion (into money or other property) of property used in a trade or business, or of property held for more than one year and either used in the trade or business or used in a transaction entered into for profit.
Property used in a trade or business is property that is subject to depreciation and held by the taxpayer for more than one year.
Code Sec. 1231 losses are any recognized loss from a sale, exchange, or conversion of the same categories of property.
A win-win equation
Gains and losses from these transactions are referred to as Code Sec. 1231 gains and Code Sec. 1231 losses. The character of the gain or loss depends on whether Code Sec. 1231 gains exceed Code Sec. 1231 losses for the tax year. If the Code Sec. 1231 gains exceed the Code Sec. 1231 losses, then all of the Code Sec. 1231 gains and losses are treated as long-term capital gains and losses. The result is a net long-term capital gain. This amount can then be netted with other capital gains and losses.
Code Sec. 1231 does not apply to depreciation that must be recaptured as ordinary income under either Code Sec. 1245 (depreciable personal property and certain real property) or Code Sec. 1250 (depreciable real property that is not Code Sec. 1245 property).
If, however, the Code Sec. 1231 losses equal or exceed the Code Sec. 1231 gains, then all of the Code Sec. 1231 gains and losses are treated as ordinary income and losses. The net result is an ordinary loss, which can offset other ordinary income.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Contact Doeren Mayhew, a Michigan Tax firm, for more information.
How do I: Compute Code Sec. 1231 gains and losses?
Code Sec. 1231 applies to gains and losses from property used in the trade or business and from involuntary conversions. Normally, you have to determine whether property is a capital asset or is ordinary income property. Property generally can't be both. However, Code Sec. 1231 allows you to "have it" both ways. Any gains are taxed at low capital gains rates (generally 15 percent for 2012), and any losses are treated as ordinary losses, taxable at more favorable ordinary loss rates, and available (without limit) to offset other ordinary income.
Who qualifies?
Code Sec. 1231 gains include:
--Recognized gains on the sale or exchange of property used in the trade or business; and
--Recognized gains from the involuntary or compulsory conversion (into money or other property) of property used in a trade or business, or of property held for more than one year and either used in the trade or business or used in a transaction entered into for profit.
Property used in a trade or business is property that is subject to depreciation and held by the taxpayer for more than one year.
Code Sec. 1231 losses are any recognized loss from a sale, exchange, or conversion of the same categories of property.
A win-win equation
Gains and losses from these transactions are referred to as Code Sec. 1231 gains and Code Sec. 1231 losses. The character of the gain or loss depends on whether Code Sec. 1231 gains exceed Code Sec. 1231 losses for the tax year. If the Code Sec. 1231 gains exceed the Code Sec. 1231 losses, then all of the Code Sec. 1231 gains and losses are treated as long-term capital gains and losses. The result is a net long-term capital gain. This amount can then be netted with other capital gains and losses.
Code Sec. 1231 does not apply to depreciation that must be recaptured as ordinary income under either Code Sec. 1245 (depreciable personal property and certain real property) or Code Sec. 1250 (depreciable real property that is not Code Sec. 1245 property).
If, however, the Code Sec. 1231 losses equal or exceed the Code Sec. 1231 gains, then all of the Code Sec. 1231 gains and losses are treated as ordinary income and losses. The net result is an ordinary loss, which can offset other ordinary income.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Contact Doeren Mayhew, a Michigan Tax firm, for more information.
FAQ: What is a family partnership?
Doeren Mayhew
FAQ: What is a family partnership?
The family partnership is a common device for reducing the overall tax burden of family members. Family members who contribute property or services to a partnership in exchange for partnership interests are subject to the same general tax rules that apply to unrelated partners. If the related persons deal with each other at arm's length, their partnership is recognized for tax purposes and the terms of the partnership agreement governing their shares of partnership income and loss are respected.
Interfamily gifts
Because of the tax planning opportunities family partnerships present, they are closely scrutinized by the IRS. When a family member acquires a partnership interest by gift, however, the validity of the partnership may be questioned. For example, a partnership between a parent in a personal services business and a child who contributes little or no services is likely to be disregarded as an attempt to assign the parent's income to the child. Similarly, a purported gift of a partnership interest may be ignored if, in substance, the donor continues to own the interest through his power to control or influence the donee's business decision. When a partnership interest is transferred to a guardian or trustee for the benefit of a family member, the beneficiary is considered a partner only if the trustee or guardian must act independently and solely in the beneficiary's best interest.
Capital or services
The determination of whether a person is recognized as a partner depends on whether capital is a material income-producing factor in the partnership. Any person, including a family member, who purchases or is given real ownership of a capital interest in a partnership in which capital is a material income-producing factor is recognized as a partner automatically. If capital is not a material income-producing factor (for example, if a partnership derives most income from services, a family member is not recognized as a partner unless all the facts and circumstances show a good faith business purpose for forming the partnership.
If the family partnership is recognized for tax purposes, the partnership agreement generally governs the partners' allocations of income and loss. These allocations are not respected, however, to the extent the partnership agreement does not provide reasonable compensation to the donor for services he renders to the partnership or allocates a disproportionate amount of income to the donee. The IRS can re-allocate partnership income between the donor and donee if these requirements are not met.
Investment partnerships
The general rule for determining gain recognition for marketable securities does not apply to the distribution of marketable securities by an investment partnership to an eligible partner. An investment partnership is a partnership that has never been engaged in a trade or business (other than as a trader or dealer in the certain specified investment-type assets) and substantially all the assets of which have always consisted of certain specified investment-type assets (which do not include, for example, interests in real estate or real estate limited partnerships).
If a family limited partnership (FLP) qualifies as an investment partnership, the FLP could redeem the partnership interest of an eligible partner with marketable securities without the recognition of any gain by the redeemed partner. To qualify, substantially all the assets of the FLP must always have consisted of the eligible investment assets, and the holding of even totally passive real estate interests (real estate that does not constitute a trade or business), for instance, must be kept to a minimum. In addition, any eligible partner must have contributed only the specified investment assets (or money) in exchange for his or her partnership interest.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Contact Doeren Mayhew, a Michigan CPA firm located in Troy, for more information.
FAQ: What is a family partnership?
The family partnership is a common device for reducing the overall tax burden of family members. Family members who contribute property or services to a partnership in exchange for partnership interests are subject to the same general tax rules that apply to unrelated partners. If the related persons deal with each other at arm's length, their partnership is recognized for tax purposes and the terms of the partnership agreement governing their shares of partnership income and loss are respected.
Interfamily gifts
Because of the tax planning opportunities family partnerships present, they are closely scrutinized by the IRS. When a family member acquires a partnership interest by gift, however, the validity of the partnership may be questioned. For example, a partnership between a parent in a personal services business and a child who contributes little or no services is likely to be disregarded as an attempt to assign the parent's income to the child. Similarly, a purported gift of a partnership interest may be ignored if, in substance, the donor continues to own the interest through his power to control or influence the donee's business decision. When a partnership interest is transferred to a guardian or trustee for the benefit of a family member, the beneficiary is considered a partner only if the trustee or guardian must act independently and solely in the beneficiary's best interest.
Capital or services
The determination of whether a person is recognized as a partner depends on whether capital is a material income-producing factor in the partnership. Any person, including a family member, who purchases or is given real ownership of a capital interest in a partnership in which capital is a material income-producing factor is recognized as a partner automatically. If capital is not a material income-producing factor (for example, if a partnership derives most income from services, a family member is not recognized as a partner unless all the facts and circumstances show a good faith business purpose for forming the partnership.
If the family partnership is recognized for tax purposes, the partnership agreement generally governs the partners' allocations of income and loss. These allocations are not respected, however, to the extent the partnership agreement does not provide reasonable compensation to the donor for services he renders to the partnership or allocates a disproportionate amount of income to the donee. The IRS can re-allocate partnership income between the donor and donee if these requirements are not met.
Investment partnerships
The general rule for determining gain recognition for marketable securities does not apply to the distribution of marketable securities by an investment partnership to an eligible partner. An investment partnership is a partnership that has never been engaged in a trade or business (other than as a trader or dealer in the certain specified investment-type assets) and substantially all the assets of which have always consisted of certain specified investment-type assets (which do not include, for example, interests in real estate or real estate limited partnerships).
If a family limited partnership (FLP) qualifies as an investment partnership, the FLP could redeem the partnership interest of an eligible partner with marketable securities without the recognition of any gain by the redeemed partner. To qualify, substantially all the assets of the FLP must always have consisted of the eligible investment assets, and the holding of even totally passive real estate interests (real estate that does not constitute a trade or business), for instance, must be kept to a minimum. In addition, any eligible partner must have contributed only the specified investment assets (or money) in exchange for his or her partnership interest.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Contact Doeren Mayhew, a Michigan CPA firm located in Troy, for more information.
May 2012 tax compliance calendar
Doeren Mayhew
May 2012 tax compliance calendar
As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of May 2012.
May 2
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates April 25-27.
May 4
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates April 28-May 1.
May 9
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 2-4.
May 10
Employees who work for tips. Employees who received $20 or more in tips during April must report them to their employer using Form 4070.
May 11
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 5-8.
May 16
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 9-11.
May 18
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 12-15.
May 23
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 16-18.
May 25
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 19-22.
May 31
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 23-25.
June 1
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 26-29.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Contact Doeren Mayhew, a Michigan Tax Firm located in Troy, for more information.
May 2012 tax compliance calendar
As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of May 2012.
May 2
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates April 25-27.
May 4
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates April 28-May 1.
May 9
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 2-4.
May 10
Employees who work for tips. Employees who received $20 or more in tips during April must report them to their employer using Form 4070.
May 11
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 5-8.
May 16
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 9-11.
May 18
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 12-15.
May 23
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 16-18.
May 25
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 19-22.
May 31
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 23-25.
June 1
Employers. Semi-weekly depositors must deposit employment taxes for payroll dates May 26-29.
If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
Contact Doeren Mayhew, a Michigan Tax Firm located in Troy, for more information.
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