Employee vs. Independent Contractor – Ten Tips for Business Owners
IRS Tax Tip
If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect how much additional cost your business [...]

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Construction Industry Tax Issues

Accumulated Earnings Tax

Closely held C corporations are more likely to accumulate earnings and profits beyond the reasonable needs of the business in order to avoid income taxes on its shareholders than are large C corporations. Each accumulated earnings case is unique. No pro forma guide for calculating a taxpayer’s reasonable [...]

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Getting to Grips with Wage Garnishment
Have you ever heard of a wage garnishment? If you haven’t, and you are responsible for paying the IRS what you owe them, then you should read on! If you’re in a position where you owe the IRS money already, then you shouldn’t just read on, but take note because [...]

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IRS to seek more regulation of tax preparers
The IRS reported that it is working on new rules that will require paid tax preparers to be licensed. This will improve tax compliance and reduce tax preparer fraud; IRS Commissioner Doug Shulman announced that on June 4, 2009.
A whopping eighty percent of taxpayers get help with their [...]

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How individuals are affected by tax changes in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

The American Recovery and Reinvestment Act of 2009 (commonly referred to as the Recovery Act), which was signed into law on Feb. 17, 2009, makes a number of beneficial [...]

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Newly revised 2008 Form 5405, First-Time Homebuyer Credit, reflects Recovery Act IR 2009-14
Mike Habib, EA Tax Relief & Tax Problem Resolution
In a news release issued on Feb. 25, 2009, IRS has announced that it has posted a revised version of the 2008 Form 5405, First-Time Homebuyer Credit, to reflect recent improvements to the [...]

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The American Recovery and Reinvestment Act of 2009 (commonly referred to as the Recovery Act), which was signed into law on Feb. 17, 2009, makes a number of beneficial changes for business. Here’s a review of the more widely applicable provisions that could have an impact on you and your enterprise.
Mike Habib, EA Tax [...]

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President’s FY 2010 budget will propose many major tax changes for businesses and individuals

“A New Era of Responsibility: Renewing America’s Promise,” the Administration’s preview of its FY 2010 budget, is available at http://www.omb.gov
Mike Habib, EA Tax Relief & Tax Problem Resolution

On Feb. 26, 2009, the Obama Administration released a document titled “A New Era of [...]

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Energy tax incentives in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

The recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) includes a package of tax incentives to encourage investments in renewable energy projects or more-efficient technologies. I’m writing to [...]

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Business tax changes in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

I’m writing to give you an overview of the key tax changes affecting business in the recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act). Please call our [...]

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Expanded college credit in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

The recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) includes a measure aimed at making college more affordable for low and moderate-income students. The new provision temporarily enlarges [...]

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Enhanced first-time homebuyer credit in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

In hopes of spurring the housing industry, the recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) includes an enhanced tax credit for first-time homebuyers. Here are the [...]

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“Making Work Pay” tax credit in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

The recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) contains a wide-ranging tax package that includes tax relief for low and moderate-income wage earners, individuals and families [...]

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IRS urged to issue pre-April 15 guidance for Madoff victims

An influential voice in politics, former New York State Governor George Pataki, has asked IRS to issue pre-Apr. 15 guidance for victims of the Ponzi scheme alleged to have been perpetrated by dealer and advisor Bernard Madoff and his firm. Separately, members of the Senate Banking [...]

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While the new law tax changes in the Emergency Economic Stabilization Act of 2008 were the most significant developments in the final quarter of 2008, many other tax developments may affect you, your family, and your livelihood. These other key developments in the final quarter of 2008 are summarized below. Please call us for [...]

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As you start to organize your records for your 2009 tax preparation, I thought you might find this brief rundown of 2009 tax changes useful.
* ADOPTION TAX CREDIT increases to $12,150 for adoption
of an eligible child.
* SECTION 179 maximum deduction decreases to $133,000.
Phase-out threshold is $530,000. (It is generally
expected that a stimulus law in early [...]

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Capital contributions did not restore or increase shareholders’ tax bases in loans to S corporations Nathel, (2008) 131 TC No. 17
Mike Habib, EA
The Tax Court has held that taxpayers’ capital contributions to S corporations did not constitute income to the S corporations and that the contributions did not restore or increase their tax [...]

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IRS tips for year-end charitable contributions IR 2008-138
Mike Habib, EA
IRS reminds individuals and businesses making contributions to charity that they should keep in mind several important tax law provisions that have taken effect in recent years. One provision offers older owners of individual retirement arrangements (IRAs) a different way to give to charity. [...]

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IRS boosts 2008 housing cost allowances for those working abroad in high-cost areas Notice 2008-107, 2008-50 IRB
Mike Habib, EA
A new Notice effectively increases the maximum housing cost exclusion for U.S. citizens and residents working abroad in specified high-cost locations. The increases are based on geographic differences in foreign housing costs relative to U.S. [...]

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Estate not taxed on transfer of decedent’s pension to charitable beneficiary PLR 200845029

IRS has privately ruled that an estate will not be taxed on a distribution of the decedent’s pension benefits to a charitable beneficiary of the estate.
Facts. An individual, whom we’ll call, Smith, died owning an interest in a defined benefit [...]

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Once is enough as far as collection of the trust fund recovery penalty is concerned Chief Counsel Advice 200838027

The IRS has issued a new Chief Counsel Advice (CCA) on the trust fund recovery penalty. The IRS notes that the CCA may not be used or cited as precedent.
IRC §6672, imposes a penalty on [...]

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USA & Malta sign new income tax treaty
[U.S. Treasury Press Release, 8/8/08]:
The U.S. Treasury Department has announced that a new income tax treaty between the United States and Malta was signed on Aug. 8, 2008 . The treaty will have withholding tax ramifications for U.S. citizens working in Malta and citizens of [...]

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Presidential candidates discuss merits of increasing the Social Security tax:
Mike Habib, EA
With less than three months until the 2008 presidential election, both candidates have expressed their views about a possible Social Security tax increase. The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers — one for Old [...]

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IRS discusses easing of cell phone recordkeeping requirements [Information Letter 2008-0012]:
The IRS has issued an information letter in response to a question regarding the noted difficultly that states and localities are having drafting cell phone policies that comply with IRS recordkeeping requirements.
Under IRC §162(a), individuals may take deductions for all ordinary and necessary [...]

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New bill extends unemployment benefits for 13 weeksThe President has signed into law H.R. 2642, “The Supplemental Appropriations Act of 2008.”
Title IV of the bill authorizes an extension of unemployment insurance (UI) benefits. Individuals may be eligible for 13 weeks of extended benefits if they: (1) are fully or partially unemployed after July 5, 2008, [...]

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Business Provisions of the Economic Stimulus Act of 2008
Mike Habib, EA
The Economic Stimulus Act of 2008 contains two provisions that provide tax benefits for businesses. The first provision increases the limit up to which a business can expense property purchased and placed in service during its 2008 tax year. The second provision provides an additional [...]

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Tax provisions directly affecting farmers in the Heartland, Habitat, Harvest, and Horticulture Act of 2008 The recently enacted “Heartland, Habitat, Harvest, and Horticulture Act of 2008” (the 2008 Farm Act) contains a package of tax changes including specialized tax breaks for the farming industry (along with a crackdown on farm losses) and new and modified [...]

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Overview of the tax changes in the Heartland, Habitat, Harvest, and Horticulture Act of 2008
The recently enacted “Heartland, Habitat, Harvest, and Horticulture Act of 2008” (the 2008 Farm Act) contains a package of tax changes including specialized tax breaks for the farming industry (along with a crackdown on farm losses) and new and modified credits [...]

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Pension plan benefits for military personnel in the Heroes Earnings Assistance and Relief Tax Act of 2008
The recently enacted “Heroes Earnings Assistance and Relief Tax Act of 2008” (the 2008 Heroes Act) provides several important pension plan benefits for military personnel. Specifically, the Act makes the following pension plan liberalizations for members of the military [...]

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Overview of tax changes in the Heroes Earnings Assistance and Relief Tax Act of 2008
The recently enacted “Heroes Earnings Assistance and Relief Tax Act of 2008” (the 2008 Heroes Act) provides targeted tax relief for military members and their families, fully offset with tightened expatriation rules, a new rule requiring U.S. companies working under federal [...]

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Temporary regs curb abuses in triangular reorganizations involving foreign corporations T.D. 9400, 05/23/2008, Reg. § 1.367(a)-3T, Reg. § 1.367(b)-14T, Preamble to Prop Reg 05/23/2008 IRS has issued temporary (along with final and proposed regs) under Code Sec. 367(b) to curb abusive triangular reorganizations involving foreign corporations—sometimes referred to as “Killer B” transactions. The [...]

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IRS expands advance pricing agreement procedures to include other issues relevant to transfer pricing Rev Proc 2008-31, 2008-23 IRB In a Revenue Procedure, IRS has expanded the procedures under which taxpayers secure an advance pricing agreement (APA) to include additional types of issues that may be resolved in the APA process.
Background. An APA [...]

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IRS clarifies ruling allowing drug manufacturers to subtract Medicaid rebates from gross receipts
Rev Rul 2008-26, 2008-21 IRB
In a revenue ruling that clarifies an earlier one issued in 2005 on the same subject, IRS concludes that Medicaid Rebates that a pharmaceutical manufacturer pays to State Medicaid Agencies are adjustments to the sales price [...]

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No refund suit is allowed in the absence of a timely claim filed with IRS
U.S. v. Clintwood Elkorn Mining Co., (S Ct 4/15/2008) 101 AFTR 2d ¶ 2008–696 Mike Habib, EAmyIRSTaxRelief.com
The Supreme Court, reversing the Court of Appeals for the Federal Circuit, has held that the plain language of Code Sec. 7422(a) [...]

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IRS acquiesces to TLC Leasing – explains meals deduction limit in employee leasing setting Rev Rul 2008-23, 2008-18 IRB
TRUCKER TAX RELIEF & TRUCKER TAX PROBLEM RESOLUTION
Mike Habib, EA
myIRSTaxRelief.com
IRS has acquiesced to the Eighth Circuit’s holding in Transport Labor/Contract Leasing (TLC Leasing) that a company leasing truck drivers to client companies wasn’t subject to [...]

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IRS Begins Focus on Foreign Athletes
and Entertainers

The IRS recently launched an Issue Management Team focused
on improving U.S. income reporting and tax payment complianceby foreign athletes and entertainers who work in the United States.The initial focus is on those engaged in tennis, golf and music. Theseindividuals and those associated with arranging their appearances inthe U.S. [...]

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Failure to follow IRS procedure prevented use of longer NOL carryback
Tualatin Valley Builders Supply, Inc. v. U.S. 101 AFTR 2d ¶ 2008–688
Mike Habib, EA
myIRSTaxRelief.com
The Ninth Circuit, affirming a district court, has held that a taxpayer could not use the special 5-year carryback period that applied for net operating losses arising [...]

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IRS rules that withholding exceptions for employees in foreign country don’t apply – Chief Counsel Advice 200814010
Mike Habib, EA
myIRSTaxRelief.com
In Chief Counsel Advice (CCA), IRS has held that a U.S. employer had to withhold on wages it paid to employees working in a foreign country. The withholding exception under Code Sec. 3401(a)(8)(A)(ii) (dealing [...]

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Foreclosure Prevention Act of 2008 – Senate passes housing stimulus bill
Mike Habib, EAmyIRSTaxRelief.com
On Apr. 10, the Senate by a vote of 84 to 12 approved H.R. 3221, the “Foreclosure Prevention Act of 2008,” the Senate housing stimulus bill. Before final passage of the bill, the Senate approved an amendment offered by Senator John Ensign [...]

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Memo explains how state property tax credits are taxed and reported – Chief Counsel Advice 200814022
Mike Habib, EA
myIRSTaxRelief.com
In Chief Counsel Advice, IRS has explained the proper federal income tax treatment of certain state property tax credits and the extent to which the state must provide information reports about the credits to IRS [...]

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IRS wrongfully revoked DLC’s tax-exempt status
Democratic Leadership Council, Inc. v. U.S., 101 AFTR 2d ¶ 2008-661
Mike Habib, EA
myIRSTaxRelief.com
A district court has held that IRS violated its own regs when it retroactively revoked the tax exempt status of the Democratic Leadership Council (DLC) as a Code Sec. 501(c)(4) social welfare organization.
Facts. In ‘85, several prominent [...]

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Kickback Income Tax Fraud – Ballard finally prevails in reversal by Eleventh Circuit
Ballard, (CA 11 4/7/2008) 101 AFTR 2d ¶ 2008-659
Mike Habib, EA
myIRSTaxRelief.com
In the latest chapter of a case with a long and storied history, the Eleventh Circuit rejected the Tax Court’s findings that a taxpayer fraudulently failed to pay tax on kickback income. Instead, [...]

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The most important IRS Tax Development in Q1 2008
Mike Habib, EA
myIRSTaxRelief.com
While the Economic Stimulus Act of 2008 was the most significant development in the first quarter of 2008, many other tax developments may affect you, your family, and your livelihood. The new law changes and other key developments are summarized below. Please [...]

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Final regs detail donee’s filing requirements for qualified intellectual property contributions
T.D. 9392, 04/04/2008; Reg. § 1.6050L-2
Mike Habib, EA
MyIRSTaxRelief.com
IRS has issued final regs explaining the information return requirements for donees receiving net income from qualified intellectual property contributions made after June 3, 2004.
Background. A taxpayer’s deduction for the donation of “qualified intellectual property” – patents, [...]

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Estate and Gift Tax Relief – Joint Committee Staff examines options for reforming transfer taxes Mike Habib, EAMyIRSTaxRelief.com
The Staff of the Joint Committee on Taxation has released JCX-23-08, Taxation Of Wealth Transfers Within A Family: A Discussion Of Selected Areas For Possible Reform. This document, which was prepared in conjunction with an Apr. 3, 2008 [...]

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District court holds that stipends paid to medical residents were exempt from FICA
Regents of the University of Minnesota v. U.S. (DC MN 4/1/2008) 101 AFTR 2d ¶ 2008-647
Mike Habib, EAmyIRSTaxRelief.com
A district court has held that stipends paid by the Regents of the University of Minnesota to medical residents were exempt from FICA under the Code [...]

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Retired insurance agents’ renewal commissions didn’t qualify for FICA special timing rule
Mike Habib, EAmyIRSTaxRelief.com
Chief Counsel Advice 200813042
In a Chief Counsel Advice (CCA), IRS has ruled that because renewal commissions paid to its retired employees were subject to a substantial risk of forfeiture as of the insurance agents’ retirement dates, an insurance company couldn’t take those [...]

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IRS Regs clarify Code Sec. 501(c)(3) exempt status and impact of excise taxes
Mike Habib, EA
MyIRSTaxRelief.com
T.D. 9390, 03/27/2008; Reg. § 1.503(c)(3)-1, Reg. § 53.4958-2IRS has issued final regs clarifying the substantive requirements for tax exemption under Code Sec. 501(c)(3) and the relationship between those requirements and the imposition of Code Sec. 4958 excise taxes. The final [...]

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Tax breaks for qualifying relatives are limited – what you should knowInternal Legal Memorandum 200812024
Mike Habib, EAmyIRSTaxRelief.com
An Internal Legal Memorandum (ILM) explains that various tax breaks are not allowed for qualifying relatives. Specifically, the ILM concludes that, apart from a dependency exemption, a taxpayer’s qualifying relative may not qualify him for the [...]

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IRS issues proposed regs reflecting PPA changes and guidance for notice of retroactively effective plan amendments
Mike Habib, EA
myIRS.TaxRelief.com
Prop Reg § 1.411(d)-3(a)(1); Prop Reg § 54.4980F-1, Q&A 8(d); Prop Reg § 54.4980F-1, Q&A 9(f); Prop Reg § 54.4980F-1, Q&A 9(g); Prop Reg § 54.4980F-1, Q&A 11(a)(7); Prop Reg § 54.4980F-1, Q&A 18(a)(4); Prop Reg § 54.4980F-1, [...]

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