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Arizona changes mind on cryptocurrency tax payments

Bitcoin fans contend that their currency is just as valid as any other money. But they've not had a lot of luck in convincing most people of that.

Cryptocurrency aficionados thought they had taken a major step toward wider acceptance in February when the Arizona Senate approved a bill that would have allowed for, beginning in 2020, the payment of state income taxes in bitcoin or other digital currency approved by the Arizona Department of Revenue (ADoR).

Four months later, that's no longer a possibility.

Crypto pay stripped from bill: When Senate Bill 1091 went to the Arizona House for consideration, those lawmakers made some changes. Like removing the payment play.

The amended bill sent to the governor on May 4 for signature states that:

"All remittances of taxes imposed by this article shall be made by bank draft, check, cashier's check, money order, cash or electronic funds transfer to the department, which shall issue receipts therefor to the taxpayers, but no remittance other than cash shall be final discharge of liability for the tax levied by this article until it has been paid in cash to the department."

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What happened to the Senate-approved proposal to let Grand Canyon State taxpayers settle their state tax bills with cryptocurrency, which the state then would then convert to U.S. dollars within 24 hours of receipt?

House members excised that portion of the bill, opting instead to simply direct the ADoR to consider accepting alternative forms, such as cryptocurrency, of payment.

Rather than fight for its original pro-cryptocurrency stance, the Senate backed off when it became clear that the idea faced stiff opposition from many wary lawmakers.

Plus, the legislative session was winding down.

Back to just studying: So now, ADoR will just look into cryptocurrency payments. And for as long as it deems necessary.

The amended legislative language that made it into the final bill now awaiting enactment reads:

"The [tax] department shall study whether a taxpayer may pay the taxpayer's income tax liability by using a payment gateway, such as Bitcoin, Litecoin or any other cryptocurrency that uses electronic peer‑to-peer systems. The department shall study the conversion of cryptocurrency payments to United States dollars at the prevailing rate after receipt and shall study the process of crediting the taxpayer's account with the converted dollar amount actually received less any fees or costs incurred by the department for conversion."

The one bit of hope cryptocurrency advocates can cling to is that Arizona is — or will one day — officially look into the tax payment option. It's at least a starting point.

You also might find these items of interest:

• Bitcoin adds twist to annual tax filing checklist
• Countries' takes on Bitcoin and taxes vary widely 
• Hacker wanted $1 million in Bitcoin as Romney tax returns ransom

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source http://www.dontmesswithtaxes.com/2018/05/arizona-changes-mind-on-cryptocurrency-tax-payments.html

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Yet One More Proposal for Relief of New State Tax Deduction Cap

The Tax Cuts and Jobs Act (PL 115-97; 12/22/17) limits the itemized deduction for state and local taxes to $10,000 ($5,000 if married filing separately). As with most of the individual tax changes including the lowered tax rates, this change only exists for 2018 through 2025.

Several states don't like this change, particularly states like New York, New Jersey and California with high state taxes. New Jersey enacted S 1893 on 5/4/18. It allows local governments to create funds where property owners can "donate" to the fund and get an 90% credit against their property tax. The federal benefit is that this is a charitable donation which shows up on the federal return as a charitable deduction rather than as a state tax deduction. Sounds like a good deal.  Too good to be true?

Perhaps now that a state has enacted such a law (although local governments still need to create the funds), Congress or the IRS will step in to let us all know if this works. While similar state tax credit funds have been around for a while, the state credit amount is usually lower. The problem is that if the "donor" gets a big benefit from the donation, was it really a charitable donation?

Other versions of this type of proposal are at the state level, such as California SB 227 which creates the California Excellence Fund. Donors get an 85% state tax credit. SB 227 passed in the Senate on 1/30/18 and is awaiting attention in the Assembly.

But California has one more proposal - AB 1485. This proposal has limited effect compared to other bills. This bill allows a 100% credit against an individual’s California income tax for a contribution to a charity located in California. The credit maximum is $500 ($1,000 for MFJ). No California deduction is allowed for the contribution. The stated goal is “to ensure California creates a robust and efficient tax incentive program that encourages all Californians to contribute to the charitable organizations serving their communities, coupled with accountability and transparency measures. Towards this end, California’s tax credit for charitable donations ensures that California taxpayers receive the maximum possible economic return on their investment and creates overall positive and sustained economic impacts for the entire state.” The bill’s effectiveness is to be judged by the number of taxpayers who claim the credit.

Critique: Unlike other proposals, such as SB 227, AB 1845 has a dollar limit. Also, the purpose might not be realistic because while for California tax purposes, the donor comes out even, if the individual does not itemize for federal purposes, there is no federal tax benefit of the donation. The FTB likely needs to define what it means to be a charity located in California and how a donor can tell (such as distinguishing a PO Box from an actual location). Also, why not say that the charity has to provide a certain portion of its benefits to Californians (or that is qualifies for a property tax exemption in California since the charity could note that on its website and the FTB can verify that). Clarification is needed on whether a charitable contribution deduction continues for donations above $500 ($1,000 if MFJ).

Will these provisions work? What if individuals use them and then Congress or the IRS says no?

What do you think?

source http://21stcenturytaxation.blogspot.com/2018/05/yet-one-more-proposal-for-relief-of-new.html

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Small Business Week: Lessons Learned

This week is National Small Business Week, a week dedicated to celebrating and supporting small businesses in your community. Although The Income Tax School is a National Business, its sister company, Peoples Tax is a small business. The Income Tax School actually grew out of a need to hire qualified tax preparers for Peoples Tax.

At The Income Tax School, it’s part of our mission to encourage and help support professionals in the industry on their career path. As I reflect on Small Business Week, I’d like to share some lessons I’ve learned along the way.

You can’t change the past, but you can change the future.

The past is the past. There’s nothing you can do about it. Keep moving forward and don’t spend your energy worrying about mistakes that have already been made. You can survive almost any business crisis if you persevere – get back on your feet and never give up. The future is what you make of it.

Believe in yourself and don’t be afraid to succeed.

Being afraid to succeed is something many business owners suffer from. They don’t put themselves out there like they should, are afraid to take risks. The fear of “being a fraud” – that you don’t deserve the business or you’re not good enough – is a real fear you will face. Stop listening to those voices. Be courageous. Put yourself out there. Be ready to succeed.

Practical experience is not a substitute for formal education.

This is especially true in the tax industry. While practical experience is important, it’s not a substitution for formal education. As a High School drop out, I can tell you that I gained a lot of practical experience in the world. It wasn’t until I went to college – at the age of 31 – that it all came together for me. Once I learned the theories, I was able to internalize the knowledge I had gained through practical experience.

Giving back is important.

It’s gratifying to give back to the communities in which you operate. Volunteering can help level out the rollercoaster ride you’re going to experience as an entrepreneur. It’s really a win-win for the organization, for your mental health, and for your business.

If you want to survive, you need to constantly adapt and change to ensure growth.

If Netflix didn’t pivot, they would not be the $100 billion company they are now. Same with Amazon, Google, and many of the world’s most powerful companies. Your business should always be evolving and changing.

Peoples Tax is a great example. When we first opened, our business model was to serve the routine 1040 and 1040A taxpayer. But as the industry evolved and self-preparing tax software became more prevalent, we had to expand beyond simple forms to more complex forms. We added business services like bookkeeping and payroll to attract more business clients. When we started struggling to find qualified preparers, we had to be innovative. We started a tax school to recruit and train our own people and ended up starting The Income Tax School.

The Income Tax School serves over 3,000 students worldwide. I am proud of what we’ve built and love that we can provide people with a means to start a new career and build their own business. Here’s a video that sums up everything I’ve discussed in this blog post. I hope it inspires you to keep moving forward. To believe in yourself and to persevere. If you need anything, we’re here with education, business resources, and lots of advice.

 

source https://www.theincometaxschool.com/blog/small-business-week-lessons-learned/

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