Today's Tax Talk with Attorney Steven Leahy

Tuesday March 8, 2022 - Cryptocurrency was designed to be independent of any organized market - decentralized is the promise. As Cryptocurrency grew, so too, did Government intervention.  

The IRS has taken the lead role - ostensibly to reduce the tax-gap, protect consumers and prevent tax cheating.  The Biden Administration recently announced  the President's delivery of an Executive Order on Cryptocurrency.

The order is expected to outline the actions government agencies should take to develop policies and regulations on digital currencies. The State Department will be directed to ensure that American cryptocurrency laws are aligned with those of U.S. allies.

Attorney Steven A. Leahy reviews the tax implications of holding, buying, selling, trading, or receiving cryptocurrency - and Non Fungible Tokens - this tax season.

Monday March 7, 2022 - Remember Obama Care (Affordable Care Act)?  There was a provision within the Obama Care Act which would have required businesses to send 1099 forms for all purchases of goods and services over $600 annually. 

That was the part of the Bill that we needed to pass in order to find out what was in it.  When Americans found out that this provision was in the Act, there was an immediate movement to repeal that reporting requirement. 

The expanded 1099 requirement was not set to go into affect until 2012.  But, in 2011 - before implementation - the President Obama signed a law that removes the expanded “1099” reporting requirement from the Affordable Care Act. Saying, "This is a big win for small businesses."

Now, many are discovering a similar provision tucked in the American Rescue Plan.  A plan promoted to rescue the American workers from the pandemic.  The "Venmo Reporting Rule" requires all taxpayers who receive more than $600 in a cash app to receive a 1099K - which is also reported to the IRS.  

The rule doesn't change the income reporting requirements - just added mountains of paperwork to the average taxpayer's tax return..

Recently, US Senators have introduced the SNOOP Act.  An acronym for "Stop the Nosy Obsession with Online Payments."

Attorney Steven A. Leahy reminds taxpayers of their right to object and supports the SNOOP act.  So, should you!

Thursday March 3, 2022 - My office is getting lots of calls about passports.  My clients (or soon to be clients) are receiving Notice CP508C - Notice of Certification of your seriously delinquent federal tax debt to the State Department.  And they are rightfully, concerned.  

Attorney Leahy "What is going on here? " is the question they ask.  

Back in 2015 the Fixing America’s Surface Transportation (FAST) Act, became law, The FAST Act includes a provision requiring the IRS to notify the U.S. Department of State if a certification is made that an individual has a seriously delinquent tax debt.

It took several years for the IRS to rev up the program - and in 2019 the IRS notified more than 400,000 taxpayers that their passports were at risk.

Attorney Steven A. Leahy reports on Notice CP508C and what to do if you get one.

Wednesday March 2, 2022 - Most of my clients run a small business.  And small business owners generally are required to pay the IRS an estimated tax each quarter, because, the United States income tax system is a pay-as-you-go tax system, which means that you must pay income tax as you earn or receive your income during the year..  

In my experience, many don't pay quarterly and this leads to an underpayment of estimated tax penalty.  

The IRS wants to stop referring this as a penalty - because, technically, the IRS simply charges you for the interest on the payments you failed to make.  Still sounds like a penalty to me.  

The Taxpayer Advocate wants to "Recharacterize the penalty for failure to pay sufficient estimated tax as an interest charge."  She thinks calling it a penalty is bad for “tax morale.”  And bad "tax morale" has an impact on tax compliance.

Attorney Steven A. Leahy explains the Penalty for Underpayment of Estimated Tax on Today's Tax Talk.

Tuesday March 1, 2022 - (Crypto Tuesday)  Blockchain has been around for some time now, since at least 2008 - but most everyday we learn of new firsts. 

In June 2021 El Salvador become the first county to accept Bitcoin as legal tender.

In October 2015, the first NFT project, Etheria, was launched and demonstrated at DEVCON 1.

In 2021 the first NFT “Quantum” to sell for more than $1 million.

We could go on and on...Every day there seems to be a new "First." 

Attorney Steven A. Leahy reviews the Blockchain news.  The first NFT vending machine, Colorado, the first state to accept cryptocurrency for tax payments, Ukraine the first country under siege to promote cryptocurrency donations, Russia, the first country avoiding sanctions with cryptocurrency.  Lots of firsts

Monday February 28, 2022 - The IRS faced the “most challenging year taxpayers and tax professionals have ever experienced,” in 2021.  This according to the National Taxpayer  Advocate 2021 Annual Report to Congress. In that report,

The Taxpayer Advocate, Erin Collins states “I am deeply concerned about the upcoming [2022] filing season, . .[p]aper is the IRS’ Kryptonite, and the agency is still buried in it.”  She concluded, "The IRS is in Crisis."

We have covered much of this crisis in this space since the beginning of the year and the beginning of the 2022 tax filing season on January 24, 2022.  We have reported on unfinished 2021 returns, taxpayer notices sent in error, refunds that go unpaid, the phone calls that go unanswered.

Attorney Steven A. Leahy surveys the landscape and concludes, throwing more money at the IRS is not the answer.

Thursday February 24, 2022 - 1099 employees are not employees at all.  They are independent contractors - separate companies.  Many who take up 1099 status do not understand this.

1099 independent contactors are responsible for their own taxes -  AND contributions to Social Security and Medicare.  So, when they collect payments, much of those payments actually should go to the federal government.  Unfortunately, Americans are conditioned to spend their income and collect a tax refund from the IRS each tax season.  

1099 Independent contractors are required to make payments to the IRS quarterly and pay their self employment taxes.  So the payments they collect are not all theirs.

Attorney Steven A. Leahy talks about important information all 1099 company owners should know.

Wednesday February 23, 2022 - We focus on Blockchain Technology, including cryptocurrency, Non Fungible Tokens (NFT), & Decentralized Autonomous Organizations (DAO) every Tuesday in this space - we call it Crypto Tuesday.  

Every once in a while a Cryptocurrency and IRS story pops up on a day not Tuesday.  A story so relevant we don't want to wait until next Tuesday to cover.

Such is the Story today in Forbes "How The IRS Is Looking For Its Share Of Cryptocurrency And NFT Growth" by Lynn Mucenski Keck.  The mix of blockchain technology and the IRS reaction to these assets is of the utmost importance in this tax season.

There is also an important IRS story following up on the ID.me controversy.  The IRS announced they were scrapping the facial recognition requirement.  As of today, the requirement for a selfie and a government document still are in place.  The IRS now says they will "transition away" for the biometric requirement.

Attorney Steven A. Leahy reviews these stories and shares his reaction.

Tuesday February 22, 2022 - What better time to discuss how cryptocurrency is taxed then tax season - before there is a problem.  While we have talked about taxing crypto many times - this little refresher won't hurt.

First, remember, cryptocurrency is not treated like fiat currency (government issued currency) - it's treated like property; like stocks.  

Simply buying Crypto is not a taxable event - it becomes a taxable event when you sell, trade or convert it.  In addition, if you receive crypto as payment for goods or services it is taxed as income.

Crypto also has some unique features - like mining, hard forks, or air drops.  How do you handle those on your tax return?

Attorney Steven A. Leahy reviews the Crypto tax rules, and what you need to know this tax season.

Monday February 21, 2022 - The Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA) provided over 11.7 million loans totaling nearly $800 billion in relief to over 8.5 million small businesses.

The plan was to forgive these loans. A borrower was to apply for forgiveness once all loan proceeds for which the borrower requested forgiveness were used. Then they were to apply for forgiveness any time up to the maturity date of the loan. 

If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.

Today, the SBA announced that there are still unforgiven PPP Loans to Small Business Totaling $28 Billion.  These loans may still be forgiven any time up to the maturity date of the loan. If small businesses do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and they will be required to start making loan payments to their PPP lender.

Attorney Steven A. Leahy summarizes the latest about the Paycheck Protection Program.