What Does Obamacare Mean for Employers, States and the IRS?

Yesterday, The Supreme Court upheld the Patient Protection and Affordable Care Act with a close, 5/4 decision. Today, political debates about the constitutionality of the decision are still going strong.

Before scrutinizing what some people are going to say is the “biggest tax increase in all of history”, it is important to fully understand the implications of the Act and why “requiring” employers to provide employee healthcare is not going to criminalize the ones who chose not to.

First off, the tax for deciding not to (yes, you are allowed to decide not to) provide your employees with health coverage isn’t that expensive. This isn’t to imply that struggling businesses who can’t afford to buy healthcare for their employees will also be able to afford the penalties, but the good news is that the IRS can’t criminalize you for not paying the penalties. If you don’t pay the tax, the IRS isn’t allowed to levy your assets, garnish your wages, etc. The Act strictly prohibits this type of behavior.

Where does this leave states that chose not to comply with the Act? The court ruled that states can opt out, but if they do, the government is not allowed to take away any funding the state uses for existing Medicaid programs.

How do you feel about Congress’ ruling? JG Tax Group would love to hear from you. Feel free to leave a comment below!

IRS Official Addresses Whistle Blower Program Complaints

As we posted last week, the IRS whistle blower program hasn’t been as productive as it was intended to be upon the opening of the Whistleblower Office in 2007.

A lack of resources, bureaucracy, and the pressure the IRS receives to uphold laws concerning taxpayer anonymity are just a few of the reasons the program hasn’t taken off as successfully as it was intended to.

Steven Miller, Deputy Commissioner for Services and Enforcement at the IRS, recently sent out this memo to top IRS Managers. Here are some of the highlights.

Regarding Upholding Taxpayer Privacy Laws:

“A contract for services under section 61 03(n) may be used when disclosure of taxpayer information is necessary to obtain a whistleblower’s insights and expertise into complex technical or factual issues.”

Regarding Efficiency:

“•Whistleblower Office-claims received should be initially evaluated by the Whistleblower Office within 90 days.

•Operating Divisions and Criminal Investigation-review by subject matter experts should be completed within 90 days of receipt.

•Whistleblower Office-whistleblowers should be notified of an award decision within 90 days of when collected proceeds can be finally determined.

I understand that there will be times when these timelines cannot be met, and exceptions will be necessary to ensure that the decision on whether to proceed to an audit or investigation considers all relevant information. Reporting in the BPRs will outline compliance with these timelines and overall timeliness of the process. BPR reports should include data on subject matter expert reviews that are suspended pending receipt of a risk analysis opinion. The Office of Chief Counsel has established controls and reporting requirements for its risk analysis opinions. My office will track this area as well. The Chief Counsel concurs in making this area a priority.”

Whether or not this memo indicates that a change in the program will be followed through with, it’s a step in the right direction. It has also been suggested that contact between the IRS and the whistleblower will be handled by the whistleblowers law firm or attorney. This will also be a tremendous help. Take this recent ad from the Ferraro Law Firm:

“…businesses need to defend the very types of underpayments you have discovered. With that in mind, ask yourself if it might not be time you had a tax whistleblower lawyer working for you—someone with the same type of experience who can fight effectively to protect your interests?”

These types of appeals may spur an influx of freelancing whistleblowers that come forth with information in order to get the percentage of what the IRS will end up collecting-if the IRS actually follows through with their recent suggestions. Whether or not that will happen is yet to be seen.

If you are seeking advice regarding IRS tax problems, contact JG Tax Group. Our staff consists of some of the most knowledgable and reputable individuals in the country and we will evaluate your situation to help you elimate your IRS tax problems.

IRS Remains Complacent on Tax Exempt Status of Churches

Preachers around the nation intend on spending the next four months promoting Pulpit Freedom Sunday. Every year since 2008, religious leaders intentionally provoke the IRS in order to make a statement regarding their tax exempt status and their “right” to freedom of speech.

As we’ve posted before, the IRS is becoming stricter about taking away tax exempt statuses from organizations that align themselves too politically.

The situation is a handful for the IRS, who needs to be seen as non-partisan. The catch 22 is that by “cracking down” on what the IRS deems as a politically involved organization, they are also inevitably still making a politically based decision.

The reason that some religious organizations feel comfortable openly promoting political parties is because in their opinion, taking away their tax exempt status would challenge two essential American values; freedom of speech, and the separation of church and state.

While churches have become more rigorous in making sure the IRS knows it will openly promote political candidates, the IRS has remained silent on the issue because of the sensitive nature of the situation.

Unless the IRS takes some sort of action, this type of activity will increase. Why does it matter? Federal tax breaks for churches add up to nearly $25 billion every year. This is money that could help the sparse resources that are currently available to the IRS, among other things.

Are you or your organization facing IRS tax problems? Don’t become a victim. Contact JG Tax Group today to discuss your rights as a taxpayer.

Japanese and Swiss Banks Agree to Report U.S. Tax Evaders

Today, the United States Treasury announced that it’s made compliance regulations easier for Japan and Switzerland in order for them to report on the bank accounts of United States citizens. This is a huge step in what many tax evading Americans have feared as FATCA (Foreign Account Tax Compliant Act) aims to expose these individuals for not reporting income hidden in offshore accounts.

Prior to Japan and Switzerland, agreements have been made with Italy, Germany, France, Spain and the U.K. The original framework for these countries was set up so that financial institutions would give reports to their local government, but Japan and Switzerland have been given the ability to report directly to the IRS, which simplifies the process. The United States Treasury has said that it will consider making the same deals with other countries if it helps ease the stress of the process.

For months, the Swiss government has been trying to negotiate an agreement that would keep the names of thousands of account holders private, therefore aiding in helping them evade taxes. This has caused the U.S. to start targeting Swiss banks individually; 11 to be exact.

The U.S. and Switzerland hope to reach an agreement by the end of the year on how to deal with past and present issues on reporting on U.S. account holders. The Swiss Banking Association says that it welcomes the implementation of FATCA and less complex reporting methods.

Many Americans have been able to, up until now, evade taxes by harboring money in offshore accounts. As the IRS becomes more aggressive, many taxpayers will be faced with problems that should not be handled lightly. Hiring a tax professional is crucial to defending your rights as a taxpayer. If you are having IRS tax problems, contact JG Tax Group today.

Why the Soda Tax Will Completely Backfire

The unfortunate reality that Americans are overweight raises valid questions concerning our countries dietary habits-but placing a tax on personal choices is ineffective and carries unintended consequences. Cigarette tax, for example, has created a black market and criminalized the lower class. If a smoker can’t afford to legally buy cigarettes, they’ll go to the entrepreneur who buys cartons from Native American smoke shops and sells them on the street.

Rather than taxing soda, we should implement an effective public awareness campaign. Persuading people to make their own decisions has been proven more effective than attempting to force people to do so. In the 1990’s, the Harvard School of Public Health masterfully rolled out the “Designated Driver” campaign with huge success. To this day, the “designated driver” is practically a requirement for social outings whereas prior to the campaign such a notion never existed.

Another troubling aspect of the soda tax is the fact that the proposal comes from Michael Bloomberg-the same man who made sweetened Snapple drinks the official beverage of New York’s high school vending machines. Can somebody say hypocrisy? The $116 million dollar deal didn’t prove profitable and was therefore axed in 2009.

The point is that rather than forcing people into health conscience decisions that may unintentionally criminalize the lower class, our government should step up as leaders and persuade, rather than force, sugar lovers to cut back in order to save their own health. Americans should be encouraged to value themselves enough to care about what they are injesting.

How do you feel about imposing “sin taxes”? JG Tax Group wants to hear from you. Leave a comment below, @reply us on Twitter, or “like” this post on Facebook below!

IRS Whistle Blower Program a Complete Failure

In 2006 Congress created a whistleblower program in order to incentivize people to blow the whistle on companies who evade taxes. If the tipsters claims are warranted by the IRS, the whistle blowers are awarded a percentage of what the IRS collects from the company. Unfortunately, this program has become a graveyard for allegations of tax avoidance.

More than 1300 claims have been filed over the past 5 years, and only three awards have been paid out. It’s clear that the IRS has no problem attracting whistle blowers, rather it has a problem with processing and handling the claims. The investigations can take years and the current underfunding that the IRS is faced with does not contribute to the productivity of the program. It is feared that the programs unsuccessful track record will eventually deter tipsters from coming forward. The IRS is also concerned with being perceived by Congress as heavy handedly enforcing itself.

IRS officials haven’t denied that the program is failing to meet expectations. Rather, it is admittedly “working hard” to make improvements in order to see the program be as effective as possible. IRS officials have said that they are reluctant to follow up with whistle blowers as often as they’d like for fear of violating strict laws that attempt to protect taxpayer privacy. The IRS has also let it be known that successful whistle blowers can wait up to seven years before receiving their reward.

There are only 35 members in the IRS whistleblower office and a lot of the work is handed off to IRS auditors, 500 of whom were laid off over the past year. There are also sentiments amongst IRS officials that perusing every whistle blower case is an inefficient use of IRS resources.

The money collected from successful whistle blower investigations could be used to lessen the national debt, increase the IRS budget and even refund other taxpayers. It’s clear that the IRS needs to find a solution in order to bring this program to its intended potential.

If you or your company is being investigated by the IRS, contact JG Tax Group today to discuss your rights as a U.S. Taxpayer.

Should Tax Exempt Organizations Be Politically Motivated?

A group of Republican senators are urging the IRS to maintain the anonymity of political donors. This comes as the IRS has taken away the tax exempt status of several organizations, forcing them to make their donors public knowledge.

The IRS has stated that tax exempt, or 501(c) organizations, should not have a primary focus on politics. If the IRS finds that an organization is primarily politically motivated it will revoke its tax exempt status. Some legal analysts say the standard for determining whether or not an organization is primarily political is if they spend more than half of their total budget for political causes.

Many watchdog groups are claiming that organizations are abusing their tax exempt status in order to keep the donors of millions of dollars in campaign contributions private. The fear is that if donors have to reveal themselves they will be deterred from contributing.

Recently, the IRS revoked the tax exempt status of the organization Emerge. They train women to run for office in New Mexico. A spokesperson on behalf of the group stated that revocation “has not changed the scope of our mission or activity”.

If you or your organization face IRS tax problems, contact JG Tax Group today to asses and solve your situation.

IRS Violates Federal Law, Misuses Millions of Taxpayer Dollars

A new report published by the Treasury Inspector General for Tax Administration, otherwise known as TIGTA, claims that the Internal Revenue Service is being non-complaint with a federal law.

The law requires the IRS to disclose any improper payments made to taxpayers on behalf of the government, and eliminate them.

The Improper Payments Elimination and Recovery Act of 2010 was intended to increase accountability on behalf of federal programs that dispersed improper payments. The only program that the IRS reported on was the Earned Income Tax Credit Program, otherwise known as the EITC.

These allegations come at the same time as Senator Jerry Moran is offering an amendment to a bill that would prohibit the IRS from using appropriated funds in order to outsource public relation services.

It is Moran’s opinion that taxpayer dollars should not be used in order to promote a service which, by nature, is self-promotional to all who pay taxes. The amendment would help ensure that taxpayer dollars did not go to public relations and advertising and instead be put towards more productive services such as providing a simpler, fairer tax code.

The IRS has spent $17.5 million taxpayer dollars over the past 4 years for marketing and is seeking an additional $15 million over the next 4 years.

Do you think that the IRS could better utilize taxpayer dollars? JG Tax Group wants to hear from you. If you are facing IRS tax problems, contact our firm today and let us fight for your taxpayer rights.

IRS May Unfairly Tax Native Americans

John Yellowbird Steele, head of the Ogalala Sioux Tribe, declared that the IRS is failing to honor tribal sovereignty by attempting to tax government assisted entities like school clothing, housing, and burial funding that members receive from their tribes.

Addressing a Senate panel Thursday, Steele referenced the treaties between the U.S. and his South Dakota tribe while admonishing the IRS for what appears to be a stepped-up effort to tax tribal aid.

“We fix homes and they would like us to place a number on how much the lumber cost to patch a hole in a roof or put shingling on a floor. They would like us to put a put a number on that and give the individual a 1099 tax form” Steele claims. “The next year, where are those individuals going to find the means to pay the IRS?”

Over time, the IRS has narrowed its tax exemptions for state, federal and locally funded social welfare for tribe members so that only those with serious monetary need aren’t required to owe tax, the tribal leaders stated.

The agency has been meeting with tribes to develop and be more specific on what’s able to be taxed under the General Welfare Doctrine, which determines whether the help tribal members receive should be counted as earnings and be taxed. But as the conferences have gone on, tribe members are still receiving audit notices from the IRS.

“The IRS violates our treaties when it attempts to tax the basic services that our tribes provide our citizens,” Steele asserted in a written affidavit.

The IRS and Native American tribes are working to clarify the issues as they present themselves. Whether or not they will come to an amicable place is yet to be seen.

If you are facing an IRS audit or other tax problems, contact JG Tax Group today. We aggressively fight the IRS to uphold taxpayer rights and can help you secure your financial future.

JG Tax Group's Advanced Tax Quiz

1. Mr. and Mrs. Black purchased their primary residence in 1995 and lived in it until they sold it in the current year. They purchased the home for $250,000 and sold it for $650,000. Since their home was sold for more than the maximum exclusion of $500,000, they are required to report the sale of their home on their current year's tax return.

True
False

2. Jerry received two acres of land valued at $10,000 as a gift. The donor's adjusted basis was $12,000. Jerry subsequently sold the land for $20,000. For purposes of computing his gain, what is Jerry's basis in the land?

$8,000
$10,000
$12,000
$14,000


3. A married couple, who are both self employed, and work out of their home, purchased a new home in July 2008 for $420,000. In September 2008, they converted two bedrooms into office space where they meet clients in their home. In April 2010, they sold their home, on which they had taken $40,000 depreciation. Their home sold for $600,000. What amount of the gain is includable in their income on their joint return??

0
$222,000
$180,000
$40,000


4. Ho Jean is a U.S. citizen living and working in France for all of 2010. She received wages of $150,000, dividends of $10,000 and alimony of $20,000 in 2010. She decides to use the foreign earned income exclusion available to her and file Form 2555. What is the amount of Jean's foreign earned income before any limitations are applied?
   0
   $80,000
   $150,000
   $180,000
   
5. If you and your spouse each have separate businesses, you may each give a $25 business gift to the same person.

True
False

Dealing with IRS tax problems should't be as tricky as this challenging quiz. If you are in trouble with the IRS, contact JG Tax Group today to secure your financial future.

IRS Rules on “Obscure” Student Income

Delivering newspapers, babysitting, private tutoring and even lawn mowing are all a part of the inevitable side jobs some may take as a college student. It’s a source of much needed, extra cash and also empahsizes responsibility and preparedness for the “real world” upon graduation.

Albeit to most college students, part of this responsibility includes paying taxes on these services.

The IRS has very specific qualifications as to what counts as taxable income for college students.

According to the IRS, the following types of revenue that students often profit from are considered taxable:

 Self-Employed Income
 Income on an Investment
 Payment for Service Rendered
 Fellowships and Scholarships

For instance, if you receive a scholarship or fellowship for $10,000 and use $9,500 for fees, books and tuition, you are left with $500. Naturally, you’d use that for personal expenses. According to the IRS, the leftover $500, if used for personal spending, is 100% taxable.

Whether or not the IRS should tax income earned by students is still a hot topic. It may seem unfair to tax students who carry both work and school, and live off a ramen diet. Either way, it’s important as a student to understand the tax laws sooner rather than later.

For more useful tax advice, please subscribe to our blog where you can choose to receive email updates daily. If you’re interested in the more technical aspects of IRS procedures, visit our other blog, or the JG Tax Group website to find a wealth of helpful information.

IRS May Receive Much Needed Budget Increase

On Tuesday, a spending bill was approved by a Senate panel that would provide additional funding for the IRS. As we reported last week, the IRS currently has too much to do, with too little resources, and if the bill passes it could help alleviate the problems the IRS is facing.

The bill would appropriate funds for IRS taxpayer services and tax law enforcement as well as help monetary regulatory agencies enforce Wall Street reforms.

The bill has been approved by the Appropriations subcommittee on financial services and general government. It would provide $12.5 billion dollars to the IRS in 2013 (fiscal year starting in October). This is a six percent increase from 2012 yet still 2 percent less than what the White House has requested.

“Money provided will aid the IRS in meeting an increased demand for services and to make adjustments that will improve taxpayers access to automated self-service applications such as refund inquires, freeing staff to handle more complex tax law inquiries,” states the summary of the bill.

The House version of the bill would only allocate $11.8 billion in IRS funds, which is the same as the current allotment.

The full Appropriations Committee will vote on the Senate bill this Thursday.

While the IRS faces its own unique set of problems, so do United States taxpayers. If you are dealing with an IRS tax problem, contact JG Tax Group today and let us evaluate and resolve your situation.

How to Prepare Your Tax Records for Hurricane Season

Hurricane season has started and the IRS recommends that individuals and companies protect their tax records against natural catastrophes by taking one or two easy steps.

Here are 3 tips from the IRS to help prepare you in case of a natural disaster.

Backup Records Electronically

Taxpayers should keep a collection of backup records in a secure area away from the authentic set. Keeping a backup set of records, financial papers, etc. is less complicated now that many documents are provided electronically. Whether or not the original record is available only on paper, it can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a transportable backup storage device, for instance a CD, external hard drive or DVD that you can take with you should you need to evacuate.

Keep a Record of Valuables

Taxpayers should document or videotape the contents of their home, particularly items of higher worth. A photographic record can help an individual prove the valuation of items for insurance and casualty loss claims. To document your property the IRS has a disaster recovery workbook, Publication 584, Casualty, Disaster and Burglary Loss Workbook, which can help taxpayers compile a comprehensive list of possessions.

Emergency Plan Updates

Emergency plans should be maintained and updated one or more times a year. Private and corporate circumstances evolve over time as do your preparedness specifications. When companies hire new staff, plans should be updated and the staff should be made aware.

Hurricane season can be messy, and so is keeping up with your taxes. If you are facing IRS tax problems, contact JG Tax Group today and let our renown staff map out your plan to get out of trouble.

State Taxes Reduce Budget Cuts, Layoffs

States expect to gather higher tax income in the approaching budget year that together would top pre-recession levels, according to a study released Tuesday.

The increase could reduce strain on states to slice budgets and lay off employees.

A slowly healing employment marketplace and slight economic expansion have increased sales and income taxes, which provide approximately three-quarters of state income. Corporate earnings taxes are also bolstering.

Total state tax income is predicted to rise 4.1% to $690 billion dollars in the 2013 budget year, according to a twice-yearly survey by the National Association of State Budget Officers and the National Governors Association.

It is the 3rd year in a row of monetary expansion and $10 billion more than the budget year that finished in June 2008. The recession commenced in December 2007.

Total state spending will bolster by only 2.2% and stay below pre-recession levels, the report stated.

Approximately one quarter of the anticipated gain in state revenue is on account of suggested tax increases in ten states. Fifteen states advocated tax cuts, though not sufficient to offset the suggested gains.

Layoffs are decreasing at the state level. State governments added a median average of nearly three thousand new jobs monthly for the past six months, after cutting nearly 5,200 the previous six months.

While state economies are feeling benefits from taxes, many U.S. citizens are facing tax issues. If you need help solving your IRS problems, contact JG Tax Group today. Our knowledgeable staff has over 120 years of combined IRS experience and will be happy to evaluate your situation and inform you of your rights as a taxpayer.