Dec. 31 wedding and divorce tax matters

End-of-Year Checklist: 5 Housekeeping Items for Your Tax Prep Business

With so much focus on the new tax law and getting ready for filing season, have you remembered to double check these mundane-yet-utterly-important items for your tax preparation business? Here’s a quick rundown of what should be on your end-of-year checklist: 5 housekeeping items for your tax prep business.

Business Insurance 

How long has it been since you last reviewed the insurance coverage you have for your business? If your tax preparation business has gone through any changes, you may not have the right coverage for what you need. If you’ve grown, you may need more coverage or different kinds of coverage (such as workers’ compensation). If you’ve scaled back, you may be wasting money paying for more coverage than what you need. There could also be new kinds of coverage that didn’t exist before that may be a good idea to protect you from new threats. For example, do you have Data Breach Insurance?

The four most basic kinds of insurance coverage that nearly every business needs are:

• Workers’ comp
• General liability
• Auto
• Property and casualty

Then, there are other different insurance policies you may want to add to your business. A few of our favorites include (but are not limited to):

• Umbrella liability – to protect you against accidents for which your current liability policies don’t cover all the expenses
• Employee practices liability – to cover you for claims that arise from illegal employee behavior
• Errors and omissions liability – to protect you from honest errors and oversights that can occur when providing tax services
• Business interruption – so you can claim compensation for any loss of income should a major event, such as illness, accident, or injury, cause you to have to shut down your business for a while
• Data breach – because a data breach can cost you hundreds of thousands of dollars by the time you total the damage

The best thing you can do is find an insurance professional you can trust who has experience working with small business owners. Consult with them to determine the best mix of policies for your business.

Data Breach Policy

What is your data breach policy? Do you have it in writing, and do your clients get a copy and have to sign to acknowledge it?

There are two sides to a good data breach policy:

• The customer-facing policy that exonerates you from liability should a data breach occur
• The strategy and best practices you follow to do your best to keep a breach from occurring and to limit the damage if/when a breach does occur

You HAVE to follow best practices and have a strong cybersecurity strategy and policy in order to limit your own liability in the event of a data breach.

A good data breach policy has three key components:

• Protective measures to guard against theft of consumer info in the first place
• A way to react swiftly when a breach does occur
• Financial coverage to fix the problem, pay for legal services, and remediate customers, if necessary

Review your current data breach policy, and go over it with a cybersecurity expert. Make sure it covers you and your clients, and make sure you’re following through on all the actions in your plan. Learn more about what the IRS requires here.

IRS Accounts

Are your accounts and certifications with the IRS up-to-date? Is your PTIN renewed? Are your fees paid? Have you met any CE requirements you may have? Make sure everything is in place and ready to roll for the coming filing season.

Fees

Have you reviewed what you charge clients for your services? Are your fees competitive? Are they fair to you and actually take into account all the work you do? When was the last time you adjusted your rates? Do you have any new services you need to consider, such as new tax consultations? Take a look at your expenses and make sure your fees are where they need to be to make your business successful. Learn more about how much to charge here.

Marketing Collateral

What kind of marketing collateral have you used in the past? Are all the brochures you pass out and ads you have printed up-to-date? Do you have enough of your printed materials to get through the season?

Do a marketing audit. What marketing efforts have paid off for you in the past? Do passing out brochures and word of mouth referrals get you the business you need? Are other forms of advertising under performing? If some forms of marketing aren’t working as well, can you give them up and allocate that budget to an area that is performing better?

While you’re reviewing your marketing collateral, make sure to take a good look at your website (the ultimate marketing tool) and any customer portals you use, too. Don’t be afraid to find a professional to help you make any important updates you might need. After all, your website is often your first impression, and you want to inspire trust and professionalism in those who visit your site. For a complete guide to tax office marketing, check out our Tax Practice Management Manual.

For more ideas on how to get your office in tip-top shape for tax filing season, check out these articles from The Income Tax School archives.

The Ultimate Marketing Checklist

Plan Now to Make Tax Season Easier for You and Your Clients

3 Best Practices for Setting up Your Own Virtual Tax Preparation Office

source https://www.theincometaxschool.com/blog/end-of-year-checklist-tax-prep-business/

IRS issues new W-4 for 2019 tax year withholding

Now-legal betting on football playoff games should pay off for IRS, too

3 Best Practices for Setting Up Your Own Virtual Tax Preparation Office

Whether you’re just getting started and don’t have a lot to invest in a traditional brick-and-mortar office set-up or you’re a seasoned veteran making money hand over fist, setting up your own virtual tax office could be a strong choice for you and your tax preparation business. Having a virtual tax office will make it possible for you to:

• Operate leaner and more efficiently, helping you reduce costs and increase profit margins
• Be more responsive to clients with cloud-based software you can access from anywhere (rather than having to “get back to your desk”)
• Keep from going crazy with some of the day-to-day office tasks that can be either automated with tax practice management software or that can be streamlined with cloud-based software and software-as-a-service (SaaS)
• Attract new customers who appreciate how up-to-date and secure your virtual office is and how easy you are to work with as a result

Even if you decide to get physical office space later, or you already have physical office space, setting up your office with the technology to be a virtual tax office is likely to improve communication with your clients.

BONUS: You and any staff you hire will also have more flexibility to work from anywhere and as needed. Imagine if your office manager can answer the phone and set appointments from a mobile phone while taking his or her kids to soccer practice! So many people look for and really value flexibility in their jobs. You may be able to attract better employees (and earn their loyalty) by being able to offer the flexibility and work-life balance that a virtual tax office has the potential to give. You also aren’t limited by your geography. You could hire the most talented people from anywhere in the world!

So, what are the 3 best practices for setting up your own virtual tax preparation office? How can you make a virtual tax prep office really work for you and anyone you hire?

Start with a Vision of What Kind of Office You Want 

It may sound a little hokey, and you’ll see this advice in a lot of places, but it’s very true. We’ve even written about it here at The Income Tax School. You have to know the kind of business and the kind of office you want in order to decide if you want a virtual office, a physical office, an office that answers calls late into the night or not…just to name a few decisions.

As you envision the kind of virtual office you want, think about:

• Will I be the boss in charge of staff, or do I want to be independent and fly solo?
• If I’m going to have employees, will I be a hands-on boss and owner, helping with client returns and doing the work alongside my employees, or do I want to let them do all the work while I manage with a light touch (possibly from the golf course)?
• What kind of clients (and how many) do I want to take on?
• What hours will I make myself and the business available to clients?
• How important will it be for me to meet face to face with clients – and how often?

The overarching question you have to ask yourself is, “What kind of life do I want?” Then, you ask, “How do I see my tax preparation business fitting into and supporting the life I want?”

Once you answer those questions, you will be better able to answer those more detailed questions about how you want your virtual tax prep office to function.

Choose the Technology That Will Support You and Your Vision

You have more choices than ever when it comes to the technology you’ll use in your virtual office. So where do you even begin?

When you’re evaluating your technology options, keep these important points in mind.

• First, consider how reliable and fast your Internet connection is. If you don’t have a high-speed connection, having a large number of complex cloud-based programs may be a very poor choice for running your services efficiently.
• Along those same lines, make sure your devices – from computers to mobile phones – can handle the software you’ve chosen to use and that everything is compatible.
• If you’re technologically inclined, you can piece together online software options for your virtual tax office. Google Drive has a whole suite of programs that can be used for free or very cheaply for businesses. Just make sure whatever you choose, that they really work for your office and the type of clients you will serve. For example, don’t keep using a cheap tax filing program just because of the cost. Really way your options for what you need. If you have to develop workarounds to make it fit into your workflow, you’re not saving any time or money that way. Choose the programs that are really functional for your workload and how you operate, and make sure everything is compatible. Read more about choosing tax software here.
• Use programs that allow you to communicate with your clients confidentially and protect their personal identifiable information (PII). For example, you may want a way to send and receive encrypted emails or to add passwords to confidential PDFs you send to clients. Consider a program that can allow clients to sign documents over the Internet, such as DocuSign or a similar service.
• If piecing together software is too cumbersome, consider choosing a cloud-based service specifically designed for virtual tax offices, such as Canopy, Vertex Indirect Tax O Series, or PitBullTax. (We don’t endorse any one product, but Capterra is a good place to start your virtual tax office software research). There are also accounting software and enterprise resources planning (ERP) tools out there that could be set up for your own purposes, such as Zoho and NetSuite (although NetSuite tends to be more useful for bigger operations).

One big advantage you get from using cloud-based programs is you don’t have to duplicate tasks across devices. For example, if your phone and computer both use the same cloud-based email provider, once you delete an email, it’s gone. You don’t have to sync your equipment or spend extra time deleting emails from both devices.

Use Your New Office Set-up to Provide Superior Service

Now that your virtual tax management practice is set up, use it to your advantage to provide superior service to your clients! Now, you’ll be able to work from anywhere, such as from clients’ offices or while traveling. The added benefit of being able to work from anywhere is that you can be more responsive to clients.

Instant messaging programs can enhance communication between you and your employees, so when any of you have a question, you can reach out to each other for a quick response.

Being on the cloud will let you share files with employees and clients, making collaboration easier.

Virtual meeting software can let you still meet face to face, thanks to webcams, and even participate in continuing education webinars together.

Setting up your tax management practice as a virtual office has the potential to make you more efficient, which could mean more time to see more clients and fewer frustrations for you and your staff. Could this be the right next step for you? Use this guide to start exploring your options.

source https://www.theincometaxschool.com/blog/best-practices-virtual-tax-preparation-office/

Wealthy donors giving more, getting added tax breaks

5 year-end tax moves that could cut your 2018 tax bill

Boxing Day tips for cool and charitable cats

Celebrating Christmas' and the tax code's magi

Merry Christmas Eve and thanks to Santa Claus for all his potentially tax-deductible work today

Tax and financial lessons from the government shutdown

One Year Anniversary of TCJA

On December 22, 2017, President Trump signed an Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, commonly referred to as the Tax Cuts and Jobs Act (Public Law 115-97). While there were over 100 hearings on tax reform starting in 2011, and a "unified framework for tax reform" released in September 2017, the final legislation moved quickly over about five weeks. There were no public hearings to analyze proposals or look at the big picture to be sure it was the type of reform needed.  The law has a long name because it was created via the budget reconciliation process so that the Senate could pass it with 51 votes rather than the usual 60. The TCJA was a partisan process.

On its anniversary, I'll offer just a few observations on the TCJA:

1. It's major goal was to lower the corporate rate and move the corporate system to more of a territorial system. This was accomplished with a flat rate of 21% rather than the prior top rate of 35%.
2. There are several new areas of complexity including an interest expense limitation of Section 163(j), excess business loss limit of Section 461(l), extra calculations for high income individual business owners under Section 199A (it is simpler if the individual has taxable income below $157,500 ($315,000 if MFJ); and most people are below these levels), and a new international regime with many new rules and complexities.
3. Most of the individual changes, including the rate reductions are temporary for 2018 through 2025.
4. With over 100 changes and the need for lots of guidance from the IRS, we continue to find surprises. One that dawned on my a few weeks ago is that while Congress explicitly expanded the preparer due diligence penalty of Section 6695(g) to cover returns where the client claims head-of-household status, it sneakily also causes this penalty to apply when the client claims the $500 dependent credit because Congress put that credit in Section 24 where the Child Tax Credit is which was already subject to the penalty. For more, see my 12/13/18 post.
5. This legislation is not the end-all of tax reform. There were many areas in need of attention that were not included in the bill for various reasons. Missing items include efforts to reduce the annual $400 billion tax gap (taxes owed but not collected), recognize today's economy that involves intangible assets (most of the TCJA favors tangible assets) and a growing gig workforce (no effort to clarify worker classification or provide a simpler/better retirement system for these workers), address the growing deficit-debt-interest expense which will harm future economic growth and be a big burden for our children and grandchildren, improve IRS operations and the tax compliance process, or address problems with Social Security, Medicare and the Highway Trust Fund. In addition, more work is needed to help our tax system meet principles of good tax policy better, such as improved equity and simplification.

btw - here is my post from 12/22/17.

What do you think?

source http://21stcenturytaxation.blogspot.com/2018/12/one-year-anniversary-of-tcja.html

What unpaid IRS employees will and won't do during a government shutdown

California to follow South Dakota nexus threshold of the Wayfair decision!

On December 11, the California Department of Tax and Fee Administration (CDTFA) announced that effective April 1, 2019, the South Dakota sales/use tax nexus thresholds will apply in California. I think we'll see the California legislature offer a law change to increase these thresholds, at least the one for 200 transactions in a year, to be something more realistic for California that also recognizes the burden on the CDTFA to seek out non-compliance vendors around the world that have 200 or more transactions in California during a calendar year, and to service the compliance ones. After all, customers not charged sales tax still need to report and pay their use tax.

I have more at my policy post at SalesTaxSupport.com - here.  Please take a look and post a comment!  Thank you!

source http://21stcenturytaxation.blogspot.com/2018/12/california-to-follow-south-dakota-nexus.html

Tax cheats get audit break during government shutdown

Top Cryptocurrency Terms Every Tax Professional Should Know

 

While cryptocurrency is a little more complicated than the currency we’re used to using, it’s still reportable to the Internal Revenue Service (IRS) for tax purposes.  A Cryptocurrency is a digital asset that is traded and secured using cryptography. You don’t need a bank to trade this currency, you can trade it peer to peer on a decentralized control called Blockchain. There are initial coin offerings (ICO) when a new form of cryptocurrency is introduced to the public, much like initial public offerings (IPO) when a company goes public. People trade, buy and sell cryptocurrency just like people do on the stock exchange.

What’s different about cryptocurrency is the technology at the very heart of it. Cryptocurrency is built on blockchain technology, a kind of database where every transaction (or block) is encrypted. It’s a very secure and transparent form of data technology, as we discuss in our previous article, “Blockchain and Accounting.”

As a tax professional, you need to know how to talk to your clients about cryptocurrency. As cryptocurrency becomes more commonplace, taxpayers are using it more frequently. Taxpayers should report and  pay taxes on any gains or income they acquire with cryptocurrency. Currently, the IRS treats cryptocurrency as property, which means that cryptocurrency profits are treated as capital gains. (Find more details in our article, “Are You Talking to Clients about Cryptocurrency?”

Let’s start with these top cryptocurrency terms every tax professional should know. Some of these terms and concepts are similar to other financial terms you already know. Others will become more familiar in short order.

Altcoins: Any coins that aren’t Bitcoin. Bitcoin was the first and used to be the only cryptocurrency. While it’s still the most successful, there are many other types of cryptocurrency – with more being introduced on a regular basis.

Anti-Money Laundering (AML): AML regulations meant to detect and stop money laundering by criminal organizations apply to cryptocurrency transactions, too.

Arbitrage: Different exchanges that sell cryptocurrencies may sell them at different rates (not unlike comparing foreign exchange rates at banks and kiosks when you need to change money abroad). Arbitrage is when you buy cryptocurrency from one exchange for a lower price and sell it to another exchange at their higher rate in order to make a profit.

Bear/bull markets: Mean the same as when you use them to describe the stock market; bear market is down, bull market is up.

Exchange: Website where cryptocurrencies are bought and sold.

Fiat: Currency recognized as legal tender by governments, such as the U.S. dollar, Euro, etc.

Limit order/limit buy/limit sell: To set a rule to buy or sell cryptocurrency at a set price.

Liquidity: How easily a cryptocurrency can be bought and sold without affecting the overall price in the market.

Margin trading: A special kind of trading where you risk your existing coings in order to increase the intensity of your trades. Margin trading is considered extremely risky and is recommended only for the most experienced of traders – and even then only on certain exchanges.

Market capitalization (or market cap): Total number of coins in supply times the price; sometimes used to compare where different cryptocurrencies stand.

Mining: The process of verifying transactions in the blockchain (AKA trying to “solve” the next block in the chain). Mining requires a lot of computer power to do successfully (a powerful computer dedicated to verifying blocks is known as a “mining rig”). The person or group that successfully solves for the next block is rewarded with a portion of the cryptocurrency.

Pump and dump: The cycle of an altcoin getting a lot of attention, rising quickly in price, and then crashing.

Shilling/pumping: Advertising your form of cryptocurrency (think: carnival barker)

Tokens: Some people or groups of people will raise money by issuing tokens for currency projects on the ethereum network. For example, Golem (GNT) and Basic Attention Token (BAT).

Wallet: Storage for cryptocurrency; can be a software wallet or a hardware wallet. (Related: “Cold storage” refers to when someone takes their cryptocurrency offline to store it and prevent it from being hacked. They may store it on a USB drive or print a QR code and store it somewhere secure, for example.)

Whale: Someone who owns a very large amount of cryptocurrency.

As you can see, there are a lot of similarities to how more traditional markets work – just the technology for transactions and some of the terms are different.

Finder.com has a great cryptocurrency glossary, if you want to read about even more terms. However, this list will get you started. Now, when your first client comes in and says, “I made some money in altcoins this summer with a combination of mining and some successful arbitrage on my part,” you’ll know what to ask next and what next steps should be.

Want to know more? Stay tuned! In 2019 we’ll be offering special courses and webinars that teach the ins and outs of Crypto Tax thanks to a new partnership with Crypto Tax Academy.

source https://www.theincometaxschool.com/blog/top-cryptocurrency-terms/

Government shutdown looms, endangering IRS' funding … and potential tax refunds

Will the Internal Revenue Service have to operate short-handed during the coming tax-filing season? Maybe. It's looking more like a government shutdown will happen after the White House rejection of the Senate-approved continuing resolution to keep all of Uncle Same's offices operating. (IRS Washington, D.C., headquarters photo by David Boeke via Flickr CC)

The Internal Revenue Service is among the federal agencies awaiting full fiscal year (FY) funding. When I woke up this morning, it looked like Uncle Sam's tax collector would get his money.

A short-term funding deal was on its way to passage, having cleared the Senate last night. House members appeared just as eager to vote and head home for the holidays.

Then came the tweets.

Donald J. Trump posted a series of comments that left most of us confused as to whether he'd sign the bill, which doesn't have his U.S.-Mexico border wall money, or veto it as part of his previously declared "proud" embrace of a government shutdown to make his immigration point.

That was followed by a White House meeting between Trump and House leadership. At the end of that get-together, House Speaker Paul Ryan (R-Wisc.) announced that Trump said he would not sign the no-wall-dollars Senate bill.

Get ready, folks, for another government shutdown.

IRS shutdown plan in place: The IRS already has issued a closure contingency plan that would be effective through the end of the year.

If the closure continues into 2019, things could get dicier, for taxpayers as well as IRS employees.

Most IRS employees, of course, would be without pay during the heart of the holiday season and possibly into 2019, when the credit card bills for gifts bought this month arrive.

As for us taxpayers, our tax refunds could be delayed if things don't get resolved quickly.

Let's hope that's not the case.

IRS funding at stake: Meanwhile, as we wait for the shuttering, at least partially as is the case with the IRS, of many of Uncle Sam's offices at midnight tomorrow (Friday, Dec. 21), let's take a look at how our country's tax collection and enforcement agency has fared financially over the years.

It's not a pretty picture.

The omnibus bill for fiscal year (FY) 2018 (which ran from Oct. 1, 2017, through Sept. 30, 2018) left the IRS budget essentially the same as the prior fiscal year. The longer-term trend, however, is not good.

The tax agency has seen its operating budget drop in the last eight fiscal years by $2.5 billion (18 percent) in inflation-adjusted terms. During that it's also lost roughly 14,000 employees, or more than a quarter of its enforcement staff.

IRS Appropriated Funding 2010-2018
In Billions of 2018 Dollars

IRS' own operational analysis: The IRS own examination of its operations paints a similar cash-strapped picture.

Every year, the IRS issues an evaluation, known as the Data Book, of its fiscal year activities. The latest version covers the 2017 fiscal year, which ran from Oct. 1, 2016, through Sept. 30, 2017.

In this latest review, the IRS looks at how during those fiscal 12 months it handled, among other things, tax returns filed and taxes collected, enforcement, taxpayer assistance and the IRS budget and workforce.

Section 8 of the 2017 Data Book underscores what CBPP and every recent IRS commissioner has said: the agency is losing personnel and needs more money.

Still, the IRS has operated for years on a budget that's hampered its ability to do its job. The agency has done its best to work around that. The preface to the 2017 Data Book notes:

"With 245 million tax returns processed in FY 2017 and more than $3.4 trillion in federal taxes paid by individuals and businesses, tax administration remains a huge undertaking. In FY 2017, the cost of collecting $100 was 34 cents, the lowest cost in more than 70 years. In all, the IRS issued over 121 million individual tax refunds totaling over $436 billion. We also continued a years-long effort to fight tax-related identity theft on many fronts, with another 524 criminal investigations completed."

The agency notes that in doing these jobs in fiscal 2017, its actual expenditures were $11.5 billion for overall operations. That was down from more than $11.7 billion in FY 2016.

Other Data Book highlights: Also last fiscal year, the IRS used 76,832 full-time equivalent positions in conducting its work, a decrease of 14.9 percent from 2012.

Taxpayer Services funding, which includes processing for tax returns and related documents, and assistance to taxpayers filing returns and paying taxes due, accounted for $2.4 billion.

Enforcement funding, which includes the examination of tax returns, collection of balances due, and administrative and judicial settlement of taxpayer appeals of examination findings, represented almost $4.7 billion

And in a non-monetary note, the IRS notes that it is more gender diverse that most of its federal counterparts.

The agency points out that in FY 2017, women represented 65.5 percent of IRS and chief counsel personnel, compared to 48.1 percent of the overall civilian labor force.

Some might argue that given pay inequity for women, the larger than average female workforce probably contributed greatly to the IRS' ability to get so much done with less money.

You also might find these items of interest:

• Trump threat of 'good' government shutdown nothing new
• How did the federal government shutdown(s) of 2018 compare to prior closures?
• Government January 2018 shutdown shouldn't affect IRS handling of your tax return, as long as closure isn't too long

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source https://www.dontmesswithtaxes.com/2018/12/government-shutdown-looms-irs-funding-and-taxpayer-refunds-at-risk.html

Wireless taxes and fees jump again 2018

5 ways to determine whether a charity is naughty or nice

Tax pros are targets of fake payroll direct deposit, wire transfer email ID theft scams

November Tax Talk Live Broadcast

Did you miss our November Tax Talk Live Broadcast on Facebook Live? Each month, Enrolled Agents Ty and LuSundra? They spent some time covering the latest phishing scams and how to avoid them – especially sneaky scams that specifically target tax preparers. They also spent some time discusses changes to the tax law and how to prepare for tax season – which as you know is NOW! Whether you tuned in and want to watch again, or missed it entirely, we’ve got you covered. Here’s the recording of last week’s broadcast.

You can join Ty and LuSundra to catch up on the latest news or ask a tax question the second Wednesday of every month at 1pm EST on The Income Tax School Facebook Page.

source https://www.theincometaxschool.com/blog/november-tax-talk-live/

Tesla buyers' tax break will be reduced in 2019 — if the federal tax credit is continued

Mileage tax deduction rates for 2019 bumped up a bit

Tax penalties increased for inflation in 2019

TCJA Expanded Preparer Due Diligence Beyond What Congress and IRS Highlight

The Tax Cuts and Jobs Act enacted December 22, 2017, included over 100 tax changes. In the discussion of tax reform, there was a possibility that the head-of-household filing status would be repealed for simplification purposes. But, it was kept. To try to reduce the errors in claiming this status, Congress expanded the Section 6695(g) preparer penalty to include application of the penalty to a paid preparer who does not exercise the appropriate due diligence in preparing a return where the client claims that status. The penalty is $530 per failure.

The Section 6695(g) penalty has gradually expanded since it was first enacted in 1997 to reduce errors in claiming and calculating the Earned Income Tax Credit by paid preparers. In 2015, Congress expanded the penalty to also possibly apply to a preparer who prepares a return where the client claims the Child Tax Credit (CTC) or American Opportunity Tax Credit (AOTC).

Congress and IRS have highlighted that the TCJA expanded the penalty to cover returns where the client claims head-of-household filing status. See for example, this November 7 news release (IR-2018-216). Well, the TCJA actually made this penalty potentially apply even more broadly! The TCJA temporarily repealed the personal and dependency exemptions. The dependency exemption was partly replaced with a $500 per dependent credit. Generally, this credit is available for your children over age 16 and under 19 (under age 24 is a full-time college student). It is also available to a qualifying relative. If a child is under age 17, the parent most likely gets a $2,000 credit for that child instead of $500.

The $500 credit is new and Congress put it in IRC Section 24 where the CTC is located. The Section 6695(g) penalty applies to "the credit allowable by section 24." So, the $500 dependent credit requires paid preparers to do extra due diligence to be sure the client is entitled to any such credit claimed. This basically means asking appropriate questions and documenting the questions and answers and maintaining this information and any documents received for at least three years after filing the return. Form 8867 must also be attached to the return.

Surprise!

What do you think?

Additional resources for Form 8867 and the Section 6695(g) preparer penalty:

• Section 6695
• Final regulations released in November 2018 (TD 9842 (11/7/18)
• Draft instructions for Form 8867
• Information from the California Franchise Tax Board on head-of-household status (California requires additional information on a return claiming this status due to potential for mistake)
• Due diligence for the EITC, CTC and AOTC (IRS Pub 4687) (let's see if this gets updated to address all items under Section 6695(g))
• AOTC - Pub 970 includes some helpful flowchart a preparer might want to have a client use to determine if they might be eligible for the AOTC

source http://21stcenturytaxation.blogspot.com/2018/12/tcja-expanded-preparer-due-diligence.html

Government shutdown won't delay 2019 tax filing season, but refunds could be affected by a long closure

Don't miss your state's 529 plan tax break deadline

California's Top 500 tax delinquent clears court hurdle

Tax identity theft prevention tips for individuals & businesses round out 2018's National Tax Security Awareness Week

Welcome to a new week, another seven days for cyber criminals to try to steal your personal, financial and tax information.

Last week, the Internal Revenue Service and its Security Summit partners in state tax departments and the tax world's private sector spent five days alerting us to potential tax identity theft schemes and ways to ensure we don't fall victim.

Unfortunately, we need to be aware of the dangers of online tax and financial crime every single day of the year, not just for one designated week. That's why today I'm recapping the National Tax Security Awareness Week warnings.

1. Protect your tax identity while shopping online.
Crooks stealing your personal info while you surf for the best holiday deals could use that data to steal your tax identity and file a false return for a fraudulent refund. My post adds my own take to the IRS alert on seven ways to protect your online tax identity.

Tips include avoiding public Wi-Fi, using security software to regularly scan and clean your machine and using strong passwords along with multi-factor authentication.

2. Don't take phishing scam bait.
The IRS says it's seeing a surge in surge of new, sophisticated email phishing scams during what should be a festive holiday time. The approaching 2019 tax filing season just ramps up these schemes. 

The increase is a bit of surprise. From 2015 to 2017, the IRS says tax-related phishing scam report had declined. But this year, more than 2,000 tax-related scam incidents were reported to the IRS from January through October, compared to approximately 1,200 incidents in all of 2017. Overall, in 2018 the IRS recorded a 60 percent increase in bogus email schemes that seek to steal money or tax data, leading to attempts to steal tax refunds

Some phishing emails appear to come from a business colleague, friend or relative. Others contain malware.

And they're not limited to emails; some are phone scams. Yes, the fake IRS agent phone scam is still calling potential victims, threatening taxpayers with lawsuits or arrest if payment is not made immediately, usually through a debit card.

3. Create strong passwords.
Yes, this recommendation was part of the first tax security week warning. It's so crucial that the IRS and Summit partners decided to devote a day to password creation and management to more fully protect your accounts and identity.

Cyber security experts now recommend that instead of a password, we use a passphrase. The idea is to create a passphrase that can be remembered easily and protect the account.

Your passphrase could be a line from your favorite movie or a series of associated words, rather than just a single word or unintelligible collection of characters. This means passwords like MyDoG#17 or $uE*s3P%8V are out. Longer, personal phrases you can remember, such as SunWalkRainDrive, are now preferred.

The Department of Commerce's National Institute of Standards and Technology (NIST) suggests this three-step approach to build a better password:

• Leverage your powers of association. Identify associated items that have meaning to you. 
• Make the associations unique to you. Passphrases should be words that can go together in your head, but no one else would ever suspect, such as items in your living room — BlueCouchFlowerBamboo — but not the names of your children.
• Picture it. Create a passphrase that you can see in your mind. Your living room décor, for example, is easy to picture and therefore remember. But a cyber crook who has never been to your house (we hope!) — or seen your living room on your social media pages … — isn't likely to guess it.

Also, use a different password or passphrase for each account.

4. Watch out for business-related W-2 scams.
The IRS says it's seeing a growing wave of identity theft and W-2 scams, especially targeting small businesses.

As with individuals, businesses may have their identities stolen and their sensitive information used to open credit card accounts or used to file fraudulent tax returns for bogus refunds.

That tax data, on employees as well as clients include the personal information contained on W-2 forms, a document highly valued by identity thieves. However, the IRS says it has seen an increase in the number of fraudulent 1120, 1120S, 1041 and Schedules K-1 forms.

Plus, identity thieves, which have long used businesses' stolen Employer Identification Numbers (EINs) to open new lines of credit or obtain credit cards, are finding new uses for these company identifying digits. Now, warns the IRS, crooks are creating fake W-2 forms, as well as using company names and EINs, to file fraudulent tax returns.

That's why businesses, partnerships and estate and trust filers should be alert to potential identity theft and contact the IRS if they experience any of these issues:

• Extension to file requests are rejected because a return with the EIN or Social Security number (SSN) is already on file;
• An e-filed return is rejected because a duplicate EIN/SSN is already on file with the IRS;
• An unexpected receipt of a tax transcript or IRS notice that doesn't correspond to anything submitted by the filer; and/or
• Failure to receive expected and routine correspondence from the IRS because the thief has changed the address.

"Identity theft can be devastating to small businesses," said IRS Commissioner Chuck Rettig. "And as tax season approaches, the IRS and the Security Summit partners continue to warn employers to be on the lookout for emails asking for sensitive W-2 information, a dangerous scheme aimed at payroll and human resource offices."

5. Tax pros need to take extra cyber security care.
Tax professionals and their client databases are a treasure trove for identity thieves, who are always looking for better sources to use in filing fraudulent tax returns, noted Rettig. That's why in 2018, cyber criminals saw the efforts by the IRS and Security Summit state and tax industry partners to improve defenses against tax-related identity theft and raised them by devising more ways to attack tax pros.

During this year's tax filing season, the IRS received five to seven reports per week from tax firms that had been data theft victims. Through Nov. 5, the IRS received 234 reports for the year. That's a 29 percent increase from the 182 reports received during the same time in 2017. And, notes the IRS, sole practitioners are just as vulnerable to data theft as practitioners in large firms.

Since the data theft reports generally are filed by firms, that means hundreds more tax practitioners and tens of thousands of clients are affected. The IRS says this increase represents a significant trend in tax-related identity theft. It's also a sign that tax professionals must take stronger measures to safeguard their clients and their businesses.

Among the steps to create such a plan, the IRS and Security Summit suggest companies at a minimum take certain basic security safeguards, including:

• Learn to recognize phishing emails, especially those pretending to be from the IRS, e-Services, a tax software provider or cloud storage provider. Never open a link or any attachment from a suspicious email.
  
  
  
• Install anti-malware/anti-virus security software on all devices (laptops, desktops, routers, tablets and phones) and keep software set to automatically update.
• Upgrade your office passwords (see #3 above) and use different passwords for each account. Also password protect wireless devices, consider a password manager program and encrypt all sensitive files/emails.
• Back up sensitive data to a safe and secure external source not connected full-time to a network.
• Limit access to taxpayer data to individuals who need to know.
• Wipe clean or destroy old computer hard drives and printers that contain sensitive data.

The IRS also reminds all professional tax preparers that they are required by federal law to create and maintain a written data security plan. IRS Publication 4557, Safeguarding Taxpayer Data, can help. Also check out NIST's Small Business Information Security – The Fundamentals.

And if you do discover any data theft or loss, report it to the appropriate IRS Stakeholder Liaison.

You also might find these items of interest:

• All states now have tax data breach notification laws
• 7 online security steps to take this holiday season (and year-round)
• World Password Day + National Small Business Week = Online and tax security tips

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source https://www.dontmesswithtaxes.com/2018/12/tax-identity-theft-prevention-tips-for-individuals-businesses-round-out-2018s-national-tax-security-.html

10 unusual but allowable FSA expenditures

CA, NY & TX, slow to act following Wayfair ruling, are missing out on holiday online shopping sales taxes

U.S. workers abroad get some tax relief thanks to inflation

Revenues and customers can still be a hobby

November Tax News Recap: Tax Pros Have New Verification Option for IRS e-Services, Plus Higher Enrolled Agent Fees

 

As you probably would expect, tax news and updates are coming fast and furious as we get closer to January 1. One important new development is that the IRS has added student loans to the list of ways professional tax preparers can verify financial account data when you register for its online e-Services. The IRS added numerous steps for verifying one’s identity after experiencing data breaches within the IRS e-Services system. Get the details in this latest article about the IRS e-Service registration process.

IRS Proposes Higher Fees for Enrolled Agents 

The IRS wants to raise fees for enrolled agents (EA) and employee retirement plan agents (ERPA) from $30 to $67. The agency says the raise in price is to cover the additional cost of processing EA and ERPA applications. Read more about the price increase and the public comment period.

Good News for Estate Tax

The IRS recently stated it intends to make the recently increased estate tax limits permanent for gifts given before the limits expire. What this means is that if someone dies and leaves someone $9 million dollars in 2018, when/if the estate tax limit goes back to its former limits ($5.45 million), as it’s slated to do at the end of 2025, recipients won’t owe taxes on the difference in 2026. Get more details on how the tax works, plus increases in giving limits.

Expansion to Free IRS Filing Software

The IRS and Free File Alliance, a nonprofit that works with the IRS to offer free online tax filing services to taxpayers, have reached an agreement. In 2019, they will offer some free tax filing services, as well as expand service offerings. Check out the details about the new agreement and how the service works for taxpayers.

Ohio Becomes First State to Accept Bitcoin

Ohio will now accept the cryptocurrency Bitcoin as payment for taxes, making it the first state in the U.S. to do so. The move has surprised some people in the industry, since Bitcoin has been dropping in value and because of money laundering risks associated with cryptocurrency. On the other hand, the blockchain technology cryptocurrencies use could also increase transparency and make tracking easier. Ohio has set up an online portal where taxpayers have to register to pay with Bitcoin in order to reduce the risk of identity theft and fraud. Read more about this latest decision from Ohio.

Wait and See with Cryptocurrency

Speaking of cryptocurrency, the medium took a big dip on Cyber Monday, as people sold off their tokens or spent them on deals. However, many analysts think the dip is temporary, because reputable places, such as state governments (Ohio) and large accounting firms, are starting to get into blockchain, signaling that the technology is becoming more accepted and the related currencies more reputable. It’s worth reading more of the analysis before making any big moves with your cryptocurrency investments.

Choosing the Best Business Entity

When advising your clients on the best tax entity to choose for their businesses, there’s a lot to consider in the new tax law. This recent article about business entities from Forbes does a good job of breaking down some of the most common choices and considerations business owners have.

Tax Forecast

For those of you who like to analyze what’s going on in politics, here’s an interesting look at what the new Congress could mean for tax and budget policy.

source https://www.theincometaxschool.com/blog/november-tax-news-recap/

December Congressional delays mean tax extenders could be pushed into 2019

National Day of Mourning for George H.W. Bush postpones federal and some state and local tax deadlines

7 ways to protect your tax identity during peak holiday online shopping season

Be a tax Santa by giving these 5 holiday gifts

IRS opens an Instagram account

Hurricane season 2018 is over, but disasters don't follow calendars so be ready year-round

House postpones vote on tax extenders, more tax reform

Disaster victims could get tax relief as part of new tax bill; IRS already offering some easier retirement plan access

Top 7 Things Tax Preparers Can Be Thankful for This Year

I can’t help but notice that when I stop and appreciate all the things that go right in my life, all the struggles and things that go wrong suddenly don’t seem so bad anymore by comparison. Focusing on what you’re grateful for is a great way to keep perspective on what’s important in your life. That’s why many of us at the Income Tax School believe in practicing gratitude every day, not just once a year according to the calendar.

At the same time, that doesn’t mean we shouldn’t take advantage of this great moment when the entire nation pauses for a day to give thanks. This is a great time for people to talk to each other and share what we’re all grateful for! Here’s a list of the top 7 things tax preparers can be thankful for this year!

The Cloud

Isn’t technology great? The internet and all these amazing cloud-based software services have made it easier (and cheaper) than ever for individuals to start their own businesses from home or wherever they like. We’re thankful for the technology that helps us and many entrepreneurs run their businesses successfully on a daily basis.

The Tax Cuts and Jobs Act

Love it or hate it, you can’t deny it’s good for the tax preparation industry. From individuals to small business owners to corporations, many people and entities need help right now interpreting the new tax laws. The tax bill also opens up an opportunity for you to offer tax planning services to your clients in addition to tax filing services.

Tax Filing Extensions

Whether you’re waiting on important information and documents or you have a client who just can’t seem to get it together, who hasn’t needed a little extra time to file once in a while? Some people’s tax strategy is to file for an extension every year. Either way, it’s good to know you can get the time when you need it – and hopefully stress about tax prep a little less.

Entrepreneurs

We love entrepreneurs – both because they are some of our best and favorite clients and because we have a lot of love and respect for the entrepreneurs who take the plunge, immerse themselves in Income Tax School classes, and go on to open their own tax prep businesses. We love to see them succeed as they help their clients and ultimately themselves, too.

Great People to Work with

From partners to employees to vendors, we’re always grateful to the people who play different roles in making our own businesses successful. We seriously couldn’t do it without them!

Emancipation Day and When Tax Day Falls on a Weekend

We’re lumping these two items together, because either scenario can push Tax Day out past April 15. In fact, for three years running (2017, 2018, 2019), we’ll have gotten to enjoy a small extension in the regular tax deadline, thanks to April 15 falling on a weekend plus the observation of Emancipation Day on the following Monday. (Washington D.C. always observes Emancipation Day on April 16. If April 16 is on a weekend, the day is observed on the Monday after April 16 – which means government offices, including the IRS, are closed.) It’s a little like getting that last bonus weekend to finish a paper in school.

You

We’re thankful for you – our readers, our ITS students, and the many people who not only have helped make the Income Tax School successful but who we consider a community of peers. From sharing ideas with each other online to catching up at the annual IRS Tax Forums, you are what make ITS so amazing and such a pleasure to be a part of. You motivate and energize us every day, and we love being here for you. So, thank you!

This is just the short list. There are so many things to be grateful for every day, from small things like hot coffee to big things like family and friends. We’d love to hear what YOU’RE grateful for this year in your tax prep business and in your life, so please tell us about it in the comments. And enjoy your Thanksgiving!

source https://www.theincometaxschool.com/blog/top-7-things-tax-preparers-thankful/

Tax extenders get extra electric vehicle element

Cyber Monday 2018 sales hit record, boosting sellers' profits and state tax coffers

IRS estate & gift tax regs ease clawback concerns

IRS warns of email tax transcript scam containing malware

Small Business Saturday also is new N.M. tax holiday

More online sales tax collection this holiday shopping season, but few expect it to dampen cyber sales

Turkey Day thanks and taxes

Alternative Minimum Tax exemption amounts, Social Security wage base increase in 2019

California, the CDTFA and the Wayfair Decision

California wildfire, Virginia hurricane victims get tax relief

Sharing and avoiding tax on wealth thanks to estate, gift and kiddie tax inflation adjustments

Medical tax provisions affected in 2019 by inflation

Tax deductions & credits affected in 2019 by inflation

5 Ways to Get in On Small Business Saturday as a Tax Business

Small Business Saturday is right around the corner! While this special holiday is geared towards holiday shopping and supporting retail businesses, it’s also about celebrating the small, local business in your community. And, if you are a local tax firm, that means you too! Don’t write the holiday off as not for you – take the opportunity to get out in your community and thank your clients.

Here are 4 ways to get in on Small Business Saturday as a tax business.

Create an Email Campaign 

We are nearing the end of the year, which means your clients should be coming to you for year end planning to ensure they make the right moves. This is the perfect opportunity to thank clients for supporting your small business while encouraging them to come in and get their year end planning done.

While you’re at it, remind them that Giving Tuesday is a great way to get their year end giving done and maybe point them to a few of your non-profit clients or non-profits you’ve done promotions with.  You can also remind them to shop local and support the local economy.

Partner up

Who in your network is holding an event as part of Small Business Saturday? Is there an opportunity to partner up and offer discounts or put flyers out at an event? What about your local Chamber of Commerce or other business association? If you can’t find an event to be a part of, at least go mingle at other local events that day. It’s all about networking and building relationships.

Promote Small Business Clients

Do you have local retailers and restaurants as clients? Give them a shout out on social media for Small Business Saturday. You could highlight them, share events or discounts, or just do a post about Small Business Saturday and tag them.

Send Out Holiday Cards

It’s officially the Holiday Season, right? Why not send out personal, handwritten cards to clients thanking them for their business – and for choosing local? You will likely be the first business to send out holiday cards, which will be memorable for sure.

Embrace Small Business Saturday with open arms and get in on the action! You’re a small business too.

 

source https://www.theincometaxschool.com/blog/small-business-saturday-tax-business-promotions/

Standard & itemized tax deductions for the 2019 tax year

2019 income tax rates and brackets adjusted for inflation

IRS criminal unit stops $10 billion in tax fraud despite steep drop in staff

Your many tax season VITA & TCE volunteer opportunities

How to help California wildfire victims

Remembering, on 11-11 and always, our veterans' sacrifices

Thumbing through the IRS' medical deduction (or not) list

IRS is ending 2017 tax return e-filing on Nov. 17

It’s OK to Say No: How and When to Fire Problem Clients (Nicely)

Sometimes someone special walks through your door – someone so special that they make you want to scream in frustration.

I’m talking about the problem client – also called the toxic client. We’re talking about that person who does nothing but cause you problems and agony. The ones who make you question why you went into business for yourself.

Well, these moments are precisely why you went into business for yourself. When you work for someone else at a company you don’t own, you might have to put up with an awful lot of ridiculous behavior and situations from coworkers and clients. You don’t get to decide who gets the boot.

But when you own your own tax business, you can decide when a client has crossed a line – and then take action to correct the situation. It’s both a drawback and a perk of being the big boss. (But ultimately, it’s more of a perk, because at least you get to be in charge of making the call!) That’s why it’s important to learn how and when to fire problem clients.

 

First, determine if they are actually a problem

Part of working for yourself – or really just part of life – is getting along with different kinds of people. Some of your clients will become your friends. Some of your clients will be just that – clients – and you’ll have purely business relationships with them. That leaves a handful of others who will always not be as easy to work with as others.

However, “not as easy to work with” doesn’t actually take them to the level of toxic clients who are so bad you need to fire them.

Ask yourself these questions:

• What is the client actually doing wrong? Is it something you can coach them to be better at? Maybe you can help teach them the best ways to work with you (for example, teaching them the right timelines for getting documentation turned in).
• Is your ego getting in the way? Do you feel that somehow they are questioning your work? Don’t let pride get in the way of a client relationship. Listen to what your client needs and see if they have a valid point – and if you can fix or improve upon whatever they’re asking for.
• Is it still possible to resolve the issue? Are you both still communicating well enough that you can sit down and listen to each other? Is it possible to reach an understanding and move forward?

Depending on the answers to these questions, you might be able to work things out.

Have you tried absolutely everything you can to salvage the relationship? If the answer is “yes” and it still isn’t working, keep reading …

 

Problem client red flags to look for

Sometimes you aren’t going to be able to resolve things with some clients. Four of the biggest, most glaring red flags are:

• Poor communication: Is your client really listening to you? Can you understand each other? Does your client let lots of time elapse between responses or give no response to your queries (time sensitive or not)? Do they refuse to use efficient ways to communicate (for example, they insist on talking on the phone or visiting in person when an email would do)?
• Poor understanding of what the problem is: This point is related to poor communication, but it’s worth talking about separately. Do you understand what the problem is – and is your client able to articulate it to you in a constructive way? Can you understand well enough to fix the problem? If you can’t even work together well enough to understand the issue and you reach a communication impasse, that’s a bad sign.
• Know-it-all attitude: Does your client tell you how to do your job, whether they know anything about taxes or not? You need their input about their financial situation, yes. However, once you get that info, you’re the expert and they are there to get advice from you. (After all, if they already knew the best way to file their taxes, they wouldn’t have come to you, right?)
• Overly harsh criticism: Does the client give unnecessarily harsh – and often unhelpful – criticism? Is their attitude hostile or are they making accusations against you? 

When you see too many of these red flags in your client relationship, it’s time to cut your toxic client loose. Otherwise, you risk digging yourself in deeper, losing more money, increasing your stress levels, and making the situation worse overall.

When it’s time to have the conversation

Once you’ve decided to let a client go, how do you tell them?

• Be direct, but not cruel. It’s all right to say something, such as, “This doesn’t seem to be the best fit for you or for me.” It’s not all right to call someone out and say, “I hate working with you. You’re a …”

• Give as much or as little detail as you feel comfortable with. I will say, in this area, less is always more. You don’t have to outline every disagreement you have had with each other. You don’t really owe them an explanation beyond, “This doesn’t seem to be working for us.” However, if you’d like to give any additional detail, feel free. Just don’t cross the line into giving away too much personal information.

• Offer helpful recommendations for other tax advisors. Feel free to make suggestions of other offices or individuals they may want to contact.
• Wish them all the best. Always try to leave things on a positive note as much as possible.

 

Of course, there is a “plan B.” You can always say something along the lines of, “Some things have come up and I’m not going to have the time and energy to devote properly to you right now.” Whether it’s true or not, some people would rather not give any hint of a problem within the client relationship. That choice is up to you. We tend to recommend the direct-but-polite route, but you make the decision that you’re comfortable with. After all, it’s your business.

Also, please note that if your client has actually done something really bad or even illegal, such as sexually harassed you or your staff, provided false documentation, or somehow put you and your staff in danger or in any legal risk, all bets are off. Call your lawyer and let them know exactly why you’re cutting off the relationship.

Assuming this is simply a toxic client you need to let go, a sample script or email (because we recommend talking on the phone or in person, but if you have to do an email, you can adapt this script) might look like this:

Hello, [Client]!

After much thought, I regret that My Tax Company, LLC, will no longer be able to help you with your tax preparation.

As much as I’d like to be able to help you, I think another tax preparer may be a better fit for what you need. You may want to reach out to [Competitor A] at [contact info] or perhaps [Competitor B] at [contact info] to see if they can help you.

Thank you again for your business. I wish you all the best!

 

Keep it short, simple, and to the point.

 

Final words

In short, know your deal breakers when dealing with clients. What can you put up with from difficult clients – and what behaviors and situations will not be tolerated?

When you’re doing a cost-benefit analysis to consider if this client is big enough to keep or not, remember to include your own sanity in that check. It’s not always about the dollars and cents. If a client causes you too much stress or could possibly damage the reputation of your office (either because your project goes badly or they start talking badly about you around town), they aren’t worth working with.

Do you have any horror stories about clients you had to let go or whom you wish you’d let go? Let us know in the comments.

source https://www.theincometaxschool.com/blog/how-when-fire-clients/

When health insurance premiums are tax deductible

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Give yourself a holiday gift by making these 10 year-end tax moves

Celebrating standard tax deductions as we turn our clocks back to Standard Time

No tax privacy for Finns, who each Nov. 1 make public everyone's income information

Indian call centers linked to Canadian phone tax scam raided

Retirement plan inflation adjustments for 2019

Digital Services Tax (DST) Plans Outside the US

New ways of doing business often challenge tax rules written for a different model. That is a concern expressed for many years by several countries. The concern is that it looks like companies that make money by other than selling tangible goods are profiting by activity in the country, but have no permanent establishment in the country, so owe no income tax. For example, a search engine company makes money when someone uses its search engine because it provides data to the company. And if the user clicks on an ad, the search engine company makes money. But no tax revenues go to the user's country.

The OECD, European Commission and others have been studying this for many years. The AICPA recently released a policy paper that explains the topic, issues and lists what some countries are doing or proposing. See AICPA Policy Report – Taxation of the digitized economy: A policy paper designed to educate, enlighten and stimulate discussion (October 2018).

The UK has also studied this issue and solicited comments on its suggestions. It now proposes to start a Digital Services Tax (DST) in 2020. In November 2017, the UK government released a discussion paper – Corporate tax and the digital economy: position paper; later updated in 2018. The position is that “a multinational group’s profits should be taxed in the countries in which it generates value.”  Also see the UK policy paper – Digital Services Tax: Budget 2018 brief. It states:

 “The DST applies a 2% tax on the revenues of specific digital business models where their revenues are linked the participation of UK users. The tax will apply to: search engines; social media platforms; and online marketplaces. That is because the government  considers  these business models derive significant value from the participation of their users.”

The UK DST will only apply to businesses with at least £500 of global revenues ($650 million USD).

Congressman Brady, Chair of the House Ways and Means Committee, stated his opposition to the UK DST – On 10/31/18, he released the following statement:

“The United Kingdom’s introduction of a new tax targeting cross-border digital services – which mirrors a similar proposal under consideration in the European Union – is troubling.  Singling out a key global industry dominated by American companies for taxation that is inconsistent with international norms is a blatant revenue grab. 

“The ongoing global dialogue on the digital economy through the OECD framework should not be pre-empted by unilateral actions that will result in double taxation. If the United Kingdom or other countries proceed, that will prompt a review of our U.S. tax and regulatory approach to determine what actions are appropriate to ensure a level playing field in global markets.”

Spain has also proposed a DST of 3%.  See DLA Piper Global Tax Alert 11/1/18.

Is a new tax the answer? Can existing income taxes be modified to address where income is generated? How easy it is to know where income is generated? I think technology makes it possible to know the location of the person clicking on a social media ad. The harder question might be where is that income generated for tax policy purposes. That has been a longstanding multistate question - where the costs of performance occur or at the destination, or perhaps some combination?

What do you think?



source http://21stcenturytaxation.blogspot.com/2018/11/digital-services-tax-dst-plans-outside.html