Category Archives: IRS

IRS Issues 2018 Standard Mileage Rates

From today’s Journal of Accountancy:

The optional standard mileage rates for business use of a vehicle will increase slightly in 2018, after decreasing in the two previous years, the IRS announced Thursday (Notice 2018-3). For business use of a car, van, pickup truck, or panel truck, the rate for 2018 will be 54.5 cents per mile, up from 53.5 cents per mile in 2017.

Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.

Driving for medical or moving purposes may be deducted at 18 cents per mile, which is one cent higher than for 2017. (The medical and moving expense deductions may be affected by the pending tax reform legislation.) The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile (Sec. 170(i)). The portion of the business standard mileage rate that is treated as depreciation will be 25 cents per mile for 2018, unchanged from 2017.

Forbes made some interesting points about how the current debate on looming tax reform may limit the use of these rates, however.

The current tax reform proposals would eliminate the mileage deduction for moving expenses and job-related business mileage deductions for employees filing a Schedule A. In addition, both proposals would disallow – on the employer’s side – favorable tax treatment for employer reimbursement of employee moving expenses. However, under Senate version of the bill, the tax treatment of these deductions would sunset, which means that the treatment of expenses would go back to the way the law is now (in 2017) beginning in 2026.

Both proposals would retain the charitable donation deduction, including for charitable miles. And in good news, under the House proposal, the mileage rate for charity would finally be indexed for inflation (it’s been 14 cents per mile since the Clinton era).

Both proposals would continue to allow you to deduct business miles related to your trade or business (for more on the difference between a Schedule A and a Schedule C, click here).

Remember: These are the rates effective at the beginning of 2018 for the 2018 tax year. Assuming that they still apply to you, that means they’ll show up on your 2018 returns (the ones you’ll file in 2019). However, you can still use the 2017 standard mileage rates for the tax return that you’ll submit in 2018. Even if the tax reform bills eliminate certain deduction as of January 1, 2018, those deductions are still applicable for the 2017 tax year.

If you’re looking for 2017 tax rates, including the standard deduction and other tax items, you’ll find them here.

NSAC Cooperative Learning Network – Upcoming Webinars

The National Society of Accountants for Cooperatives offers some great online learning resources from time-to-time, and in today’s e-newsletter update, a few in particular were listed that caught my attention. In particular, George Benson and Teree Castanias are excellent, knowledgeable presenters, and Don Frederick — himself a legend in the co-op tax world — does a great job introducing the concept of co-op taxation.

Book vs Tax vs Hybrid Basis of Paying Patronage
Tuesday, November 14, 2017
02:00 PM EST / 01:00 PM CST / 12:00 PM MST / 11:00 AM PST

A cooperative must return the profits of its patronage operations to the member/patrons based on the business done with the cooperative for the year. But how that income is computed (book, tax or hybrid) will create very different results. How the cooperative addresses this issue can have important financial and member relations implications.

MORE INFO    REGISTER NOW 

Fraud Risk Management for Cooperatives
Wednesday, December 06, 2017
11:00 AM EST / 10:00 AM CST / 09:00 AM MST / 08:00 AM PST

Cooperatives face a multitude of risks every day. How that risk is managed can affect the long-term success of the organization. Fraud Risk Management for Cooperatives focuses on recognizing risks, especially related to the difficult topic of fraud, and building a simple, actionable organization wide plan to effectively manage those fraud risks.

MORE INFO    REGISTER NOW

Basic A&A Seminar
Tuesday, December 12, 2017
11:00 AM EST / 10:00 AM CST / 09:00 AM MST / 08:00 AM PST

This 4-hour, 4-CPE credit course, is designed for new hires and other employe es of cooperatives and firms serving cooperatives that can benefit from training in the unique nature of cooperatives.

Introduction to Cooperatives – Donald Frederick (11:00 am – 12:00 pm
During this presentation we explain the foundation for doing business on a cooperative basis, with special emphasis on the owner-customer role of a co-op’s members. We discuss the rich history of cooperatives in America, the many types of cooperatives in our communities, and conclude with an examination of the benefits of having businesses operate as cooperatives.

Equity Management & Inter-Cooperative Investments – Phil Miller (12:00 pm – 1:00 pm
The course discusses the various types of Cooperative Equity and introduces the concepts of Equity Redemption. It discusses the Components of Inter-Cooperative Investments and why Co-ops so often invest in each other. It covers Balance Sheet and Income Statement Presentation, Timing and Recognition issues, Footnote Disclosures, and Impairment Questions related specifically to Inter-Cooperative Investments.

Lunch (1:00 pm – 1:30 pm
The audio portion of the CLN will be suspended during this time.

Basic Cooperative Taxation – Donald Frederick (1:30 pm – 2:30 pm
During this session we discuss the unique Federal income tax treatment of cooperatives. We focus on how tax law supports equity accumulation by cooperatives, particularly the patronage refund. We conclude by providing a set of tools to facilitate tax planning by cooperatives and their professional advisers.

Co-op GAAP – Phil Miller (2:30 pm – 3:30 pm
The course discusses how all GAAP is applicable to co-ops, but also how some GAAP applies specifically to only co-ops. We will discuss the two single pieces of GAAP that form the basis for Co-op GAAP, plus one piece of GAAP that applies to electric co-ops. We will discuss how NSAC has contributed to the body of Co-op GAAP over the years and will finish with a discussion of the new FASB Codification and how Co-op GAAP is contained within the Codification.

MORE INFO    REGISTER NOW 

Record Retention Policies and Practices: A Legal Perspective
Tuesday, January 16, 2018
11:00 AM EST / 10:00 AM CST / 09:00 AM MST / 08:00 AM PST

What documents do you have to keep?? Can you destroy documents?? This session will answer those questions and discuss organizing, cataloguing, r etaining and routinely destroying documents to allow you to review your process at your organization.? The process of creating and enforcing a formal policy for document retention with attendant schedules will be examined, and the annual documentation that should accompany the policy will be discussed. Legal holds for documents and leading practices for routine destruction will also be reviewed

MORE INFO    REGISTER NOW 

Advanced A&A Seminar
Wednesday, March 14, 2018
11:00 AM EST / 10:00 AM CST / 09:00 AM MST / 08:00 AM PST

This 4-hour webinar is designed for recent hires and other employees of cooperatives and firms serving cooperatives that can benefit from training in the unique nature of cooperatives. The three modules presented in this course include Hedge Acco unting, Advanced Cooperative Taxation and Co-op Ratio Analysis.

MORE INFO    REGISTER NOW 

The full list of online webinars can be found at the NSAC Cooperative Learning Network.

IRS Filing Date Announcements

The IRS made two announcements yesterday about filing dates. One is that for Tax Year 2016, E-File closes this Saturday, November 18; after that, disaster victims and others need to file on paper.

While most individuals have already filed their 2016 federal tax returns, certain taxpayers may qualify for an extension until Jan. 31, 2018. This includes taxpayers who live in a federally declared disaster area, have a U.S. tax filing obligation, and had previously obtained a valid 6-month extension of time to file their federal tax return.

The second announcement is that the IRS has not yet set the date on which they will be accepting Tax Year 2017 returns.

Speculation on the Internet that the IRS will begin accepting tax returns on Jan. 22 or after the Martin Luther King Jr. Day holiday in January is inaccurate and misleading; no such date has been set.

The IRS must keep an eye on pending legislation and extender tax provisions that may be renewed, and then finish updating programming and processing systems before they can announce a filing season start-date.

However, they also explain that:

Due to law changes first affecting last year’s returns, the IRS cannot issue refunds for tax returns claiming the EITC or ACTC before mid-February. This law requires the IRS to hold the entire refund — even the portion not associated with the EITC or ACTC. However, there is no need to wait to file such returns since the IRS will process them to the point of refund and then begin refund release when permitted by law.

IRS To Reject Tax Returns Next Year Without Health Coverage Info

Accounting Today, October 19, 2017 —

The Internal Revenue Service said that for the upcoming 2018 filing season, it‎ will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the Affordable Care Act, the first tax season it has refused to accept such returns.‎

In an update Friday to the web page of its ACA Information Center for Tax Professionals, the IRS said it will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. On top of that, the IRS said tax returns filed on paper that don’t address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.

Full article here: IRS won’t accept returns next year without health coverage | Accounting Today

Budget Cuts Cause IRS to Discontinue ‘Automated Substitute for Return’ Program

When a taxpayer who has a tax filing requirement fails to file a tax return, the IRS is allowed to use third-party information to determine a tax liability and assess it. The IRS handles these cases mostly through the ASFR Program, which enforces filing compliance against taxpayers who haven’t filed individual income tax returns but seem to owe a lot of money in taxes.

“The Automated Substitute for Return (AFSR) program is a component of our collection strategy to promote filing compliance,” wrote Mary Beth Murphy, commissioner of the IRS’s Small Business/Self-Employed Division, in response to the report. “Attempting to bring noncompliant taxpayers into compliance ensures fairness and reduces the burden on taxpayers who fully pay their taxes on time. Resource constraints have forced us to make difficult decisions with respect to some of our programs, even those that provide clear benefits to tax administration. Because a nonfiler strategy is important to our mission, we are currently working to develop one that fits within the current and future IRS operating environment, requiring fewer human resources, while providing an opportunity for us to achieve our desired outcomes.”

Full story here: IRS scales back program to go after people who don’t file taxes | Accounting Today

IRS California Wildfires Tax Relief

I feel like almost all of my posts over the past few months have been regarding IRS disaster relief. Here’s one more, from today’s IRS E-News for Tax Professionals.

Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.

Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Oct. 8, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes originally due during this period.

This includes the Jan. 16, 2018 deadline for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.

A variety of business tax deadlines are also affected, including the Oct. 31 deadline for quarterly payroll and excise tax returns. Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017 also qualify for the extra time.

In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due after Oct. 8 and before Oct. 23, if the deposits are made by Oct. 23, 2017. Details on available relief can be found on the disaster relief page on IRS.gov.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes firefighters and workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year) or the return for the prior year (2016). See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Source: IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File | Internal Revenue Service

IRS Webinar: Understanding Tax Relief for Victims of Disasters

In today’s IRS e-News for Tax Professionals, the IRS announced a 2-hour webinar — held twice, once on Oct 18 and again on Oct 19 — geared toward helping taxpayers and their preparers understand various tax relief provisions in the code and administrative rulings.

Following the recent natural disasters in various parts of the U.S., this timely web conference will discuss:

  • Statutory Tax Relief for Casualty Victims (Both Individual & Business)
  • Special Rules for Federally Declared Disaster Areas
  • IRS Disaster Assistance Administrative Relief
  • Calculating and Reporting Disaster Area Losses
  • Involuntary Conversions resulting from Disaster Losses
  • Disaster Related Tax Issues: Harvey, Irma & Maria

A live question and answer session will round out the webinar.

Register and Attend:

Oct. 18 – 11:00 a.m. Eastern

Oct. 19 – 11:00 a.m. Eastern

Closed captioning is offered for the Oct. 19 web conference only.

Source: Understanding Tax Relief for Victims of Disasters

IRS – Hurricane Maria Puerto Rico Relief

The IRS has announced Tax Relief for Victims of Hurricane Maria in Puerto Rico, similar to the announcements previously made for Texas and Florida hurricane disasters.

From this week’s National Association of Tax Professionals e-newsletter:

The IRS is offering a recap of key tax relief provisions affecting taxpayers who suffered losses resulting from Hurricanes Harvey, Irma and Maria.

In general, the IRS is now providing relief to individuals and businesses anywhere in Florida, Georgia, Puerto Rico and the Virgin Islands, as well as parts of Texas. Because this relief postpones various tax deadlines, individuals and businesses will have until January 31, 2018, to file any returns and pay any taxes due. Those eligible for the extra time include:

  • Individual filers whose tax-filing extension runs out on October 16, 2017. Because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.
  • Business filers, such as calendar-year partnerships, whose extensions ran out on September 15, 2017.
  • Quarterly estimated tax payments due on September 15, 2017, and Jan. 16, 2018.
  • Quarterly payroll and excise tax returns due on October 31, 2017.
  • Calendar-year tax-exempt organizations whose 2016 extensions run out on November 15, 2017.

A variety of other returns, payments and tax-related actions also qualify for additional time. See the disaster relief page on IRS.gov for details on these and other relief provisions the IRS has offered since these hurricanes began hitting in August.

NSAC Cooperative Learning Network – Upcoming Webinars

The National Society of Accountants for Cooperatives offers some great online learning resources from time-to-time, and in today’s e-newsletter update, a few in particular were listed that caught my attention. In particular, George Benson and Teree Castanias are excellent, knowledgeable presenters, and Don Frederick — himself a legend in the co-op tax world — does a great job introducing the concept of co-op taxation.

Current Cooperative Tax Developments
Thursday, October 19, 2017
11:00 AM EST / 10:00 AM CST / 09:00 AM MST / 08:00 AM PST

George Benson, Attorney, McDermott Will & Emery, LLP
The program will include a review of Section 199 developments, including pending Court cases. If there is anything definite to discuss with respect to tax reform, it will address the potential impact on cooperatives and their members. In addition, the program will review areas where historically there has been controversy between the IRS and cooperatives and discuss their current status.

MORE INFO    REGISTER NOW 

Book vs Tax vs Hybrid Basis of Paying Patronage
Tuesday, November 14, 2017
02:00 PM EST / 01:00 PM CST / 12:00 PM MST / 11:00 AM PST

Teresa (Teree) Castanias, CPA
A cooperative must return the profits of its patronage operation s to the member/patrons based on the business done with the cooperative for the year. But how that income is computed (book, tax or hybrid) will create very different results. How the cooperative addresses this issue can have important financial and member relations implications.

MORE INFO    REGISTER NOW 

Basic Accounting & Auditing for Co-ops Seminar
Tuesday, December 12, 2017
11:00 AM EST / 10:00 AM CST / 09:00 AM MST / 08:00 AM PST

This 4-hour, 4-CPE credit course, is designed for new hires and other employees of cooperatives and firms serving cooperatives that can benefit from training in the unique nature of cooperatives.

Introduction to Cooperatives – Donald Frederick (11:00 am – 12:00 pm
During this presentation we explain the foundation for doing business on a cooperative basis, with special emphasis on the owner-customer role of a co-op’s members. We discuss the rich history of cooperatives in America, the many types of cooperatives in our communities, and conclude with an examination of the benefits of having businesses operate as cooperatives.

Equity Management & Inter-Cooperative Investments – Phil Miller (12:00 pm – 1:00 pm
The course discusses the various types of Cooperative Equity and introduces the concepts of Equity Redemption. It discusses the Components of Inter-Cooperative Investments and why Co-ops so often invest in each other. It covers Balance Sheet and Income Statement Presentation, Timing and Recognition issues, Footnote Disclosures, and Impairment Questions related specifically to Inter-Cooperative Investments.

Lunch (1:00 pm – 1:30 pm
The audio portion of the CLN will be suspended during this time.

Basic Cooperative Taxation – Donald Frederick (1:30 pm – 2:30 pm
During this session we discuss the unique Federal income tax treatment of cooperatives. We focus on how tax law supports equity accumulation by cooperatives, particularly the patronage refund. We conclude by providing a set of tools to facilitate tax planning by cooperatives and their professional advisers.

Co-op GAAP – Phil Miller (2:30 pm – 3:30 pm
The course discusses how all GAAP is applicable to co-ops, but also how some GAAP applies specifically to only co-ops. We will discuss the two single pieces of GAAP that form the basis for Co-op GAAP, plus one piece of GAAP that applies to electric co-ops. We will discuss how NSAC has contributed to the body of Co-op GAAP over the years and will finish with a discussion of the new FASB Codification and how Co-op GAAP is contained within the Codification.

MORE INFO    REGISTER NOW 

The full list of online webinars can be found at the NSAC Cooperative Learning Network.

Reconstructing Records After a Natural Disaster

In the wake of recent hurricanes, the IRS has issued a new Fact Sheet — FS-2017-11. It walks through the process of how to calculate Casualty and Disaster Tax Losses, as well as how to reconstruct records after a natural disaster, such as:

  • Tax records
  • Homes and other real estate
  • Vehicles
  • Personal property
  • Business records

AccountingWeb wrote up a nice summary of the fact sheet, but for the details, see the original at the IRS website: Reconstructing Records After a Natural Disaster or Casualty Loss; IRS Provides Tips to Help Taxpayers | Internal Revenue Service.