Today's Tax Talk with Attorney Steven Leahy

Thursday November 17, 2022 - At Opem Tax Advocates we are passionate about helping business owners lower their tax bill, avoid audits, and grow their business.  So, today, we review an article pointing out that “New business formation has boomed,” and pointing out that “some tax changes -coupled with evergreen tax issues that tend to trip up small business – could cause headaches if owners aren’t careful.”

Attorney Steven A. Leahy also follows up on an old BIG story.  Remember when the IRS wanted taxpayers to use facial recognition to use IRS services?  Recently, a House Oversight Committee released an investigation into  ID.me, “concluding that the company ‘inaccurately overstated its capacity to conduct identity verification services to the Internal Revenue Service.’“

Attorney Steven A. Leahy talks to business owners on Today’s Tax Talk.

https://www.cnbc.com/2022/11/15/business-owners-have-a-big-tax-deadline-coming-up-well-before-april.html

https://www.cyberscoop.com/idme-irs-identity-verificatio

The Biden Administration has named a Nominee to take over the IRS.  His name is Daniel Werfel, now Managing Director and Partner of the Boston Consulting Group.

IRS Commissioner Chuck Rettig’s term formally ended on November 12. Doug O’Donnell, the IRS Deputy Commissioner for Services and Enforcement, is now serving as acting IRS Commissioner.

Mr. Werfel has a long history of government employment.  Including, the Office of Management and Budget, The Department of Justice, and Chief of the Financial Integrity and Analysis Branch within the Office of Federal Financial Management, before being app.

https://www.nytimes.com/2022/11/10/us/politics/daniel-werfel-irs-commissioner.html

https://www.hstoday.us/subject-matter-areas/federal-government/former-acting-commissioner-danny-werfel-nominated-to-lead-irs/

Tuesday November 15, 2022 - Everyone is talking about the collapse of FTX and the firm's founder Sam Bankman-Fried.  From hero to zero, overnight!

While this collapse has the striking newness of Cryptocurrency - the scandal in not much different than the bank collapse of old - or the brazen workings of Bernie Madoff.

Attorney Steven A. Leahy will look at this scandal with new eyes on Today's Tax Talk.

https://www.npr.org/2022/11/15/1136641651/ftx-bankruptcy-sam-bankman-fried-ftt-crypto-cryptocurrency-binance

https://www.fox13news.com/news/why-cryptocurrency-experts-investors-are-not-dissuaded-by-the-fall-of-ftx

https://www.msn.com/en-us/money/news/is-ftx-s-sam-bankman-fried-the-next-bernie-madoff/ar-AA148KkL

Wednesday November 9, 2022 - The IRS calls an audit an “Examination of Returns.” The IRS accepts most federal tax returns just as they are filed. Some returns, however, are selected for review. The IRS selects returns for audit by computerized screening, random sample, or by an income document matching program. 

An examination can take place in several ways. Some audits are handled exclusively by US Mail, in the taxpayer’s home or place of business, at an IRS office or at your representative’s office. The time, place, and manner of the audit are negotiable.

Attorney Steven A. Leahy reviews the 11 things you need to know to avid an IRS audit (plus one bonus).

https://chicagotaxteam.com/irs-tax-resolution-blog/irs-audits-looking/

Monday November 7, 2022 - This space has been reporting on the Cash App law created by the American Rescue Plan of March 2021. The law changed the tax reporting requirements for third-party payment apps from 200 Transactions AND $20,000 or more to $600 or more, no matter the number of transactions.  

This change went into effect on January 1, 2022.  That means the new rule won’t really come to light until February 2023 when the information Returns must be delivered to taxpayers.  Third-party payment apps, like Venmo, paypall, Cash app, etc. are subject to this rule.  

But, early on, Zelle let consumers know they were not subject to this new rule.  Because Zelle is not a third-party payment app.  Instead, Zelle is a bank-to-bank payment service not subject to the 1099-K reporting rules.

Attorney Steven A. Leahy will take a close look at Zelle’s claim on Today’s Tax Talk.

https://www.bloomberg.com/news/articles/2022-11-07/zelle-becomes-loophole-for-businesses-to-avoid-irs-venmo-tax

Wendesday November 2, 2022 - The IRS has recalculated the guesses they made in 2014 - 2016.  And, to one's surprise - the estimates were raised.

The estimates are made up of people who do not file taxes; underreporting, or taxes that are understated on returns that are filed timely; and underpayment, or taxes reported, but not paid, on time.

The outgoing Commissioner Charles Rettig said, "The increase in the tax gap estimates reflects that the IRS needs to do more, both in improving taxpayer service as well as working to improve tax compliance.”

The estimates for the most recent tax reporting year, 2020, vary widely, for $250 Billion to $1 Trillion, depending on who and why the number is being reported.  

Attorney Steven A. Leahy looks at the latest estimates on Today's Tax Talk.

https://cbs4local.com/news/nation-world/irs-finds-number-of-unpaid-taxes-rises-fueling-growth-of-tax-gap-internal-revenue-service-audits-income-charles-rettig-inflation-reduction-act-treasury-department

https://www.journalofaccountancy.com/news/2022/oct/growing-tax-gap-shows-need-better-service-compliance-irs-

Tuesday October 25, 2022 - Crypto news has diminished, along with its market cap. Blockchain has taken over the space.  

Blockchain in banking. Blockchain public finanicing.  Blockchain in gold market.  Blockchain in gaming.  Its everywhere.  

This expansion was predicted by John McAfee

Attorney Steven A. Leahy discusses Blockchain on Today's Tax Talk.

https://www.yahoo.com/now/fraud-prevention-fuelling-blockchains-adoption-070000893.html

https://www.etftrends.com/crypto-channel/jamie-dimon-praises-blockchain-calling-the-technology-real/

https://www.bloomberg.com/news/articles/2022-10-16/a-proposal-to-track-gold-bars-with-blockchain-technology#xj4y7vzkg

Wednesday October 19, 2022 – Yesterday the IRS announced the tax year 2023 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes.

The tax year 2023 adjustments described below generally apply to tax returns filed in 2024.

The tax items for tax year 2023 of greatest interest to most taxpayers include the following dollar amounts:

• The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $1,800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.

• Marginal Rates: For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).

The other rates are:

35% for incomes over $231,250 ($462,500 for married couples filing jointly);

32% for incomes over $182,100 ($364,200 for married couples filing jointly);

24% for incomes over $95,375 ($190,750 for married couples filing jointly);

22% for incomes over $44,725 ($89,450 for married couples filing jointly);

12% for incomes over $11,000 ($22,000 for married couples filing jointly).

The lowest rate is 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).

Attorney Steven A. Leahy reviews the latest changes on Today's Tax Talk.

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023

https://thehill.com/policy/finance/3694978-tax-filers-can-keep-more-money-in-2023-as-irs-shifts-brackets/

https://www.cnn.com/2022/10/19/success/inflation-adjustment-2023-taxes/index.html

https://inflationdata.com/Inflation/Inflation_Rate/CurrentInflation.asp?reloaded=true

https://www.irs.gov/newsroom/inflation-adjusted-tax-items-by-tax-year

Tuesday October 18, 2022 - We have previously reported on the Internal Revenue Service (IRS) switching terms from Virtual Currency to Digital Assets. Today, the IRS clarified how to report Digital Assets on their 1040 income tax forms – setting up additional regulations very soon.

Further, the IRS defined Digital Assets to include:

• Virtual currencies such as Bitcoin and Ether

• Stablecoins such as Tether and USD Coin (USDC) 

• Non-fungible tokens (NFTs)

You may owe taxes on the following transactions:

• Sale of a digital asset

• Exchange of digital assets for property, goods or services

• Exchange or trade of one digital asset for another

• Receipt of a digital asset as payment for goods or services

• Receipt of a new digital asset as a result of mining and staking activities

• Receipt of a digital asset as a result of an air drop

• Use of digital assets to pay for goods or services

• Any other disposition of a financial interest in a digital asset

• Receipt or transfer of a digital asset for free (without providing any consideration) that does not qualify as bona fide gift

Attorney Steven A. Leahy looks at the new rules on Today's Tax Talk.

https://www.bloomberg.com/news/articles/2022-10-18/crypto-investors-get-some-answers-in-us-tax-form-instructions

https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets

Monday October 17, 2022 - The tax return deadline has arrived.  This year, because October 15th was a Saturday, the deadline wa pushed to today, October 17, 2022.  

Did you know the extension only extends thd date to file your return - and NOT the date to pay your taxes.  That date is always the date the returns were due before an extension.  Typically, that date is Apri 15th.  But, as we have seen, the IRS can change that date for an emergecny.  For example - those in Florida have been granted addtional time, on top of the extension, to complete ther returns.

https://www.usatoday.com/story/money/personalfinance/2022/10/16/tax-deadline-extension-october-2022/10495745002/

https://www.marca.com/en/lifestyle/us-news/personal-finance/2022/10/03/633ae40fe2704eebb58b45de.html