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Fort Worth Tax Law Blog

Surprise! 10 million taxpayers get an unexpected penalty.

10 million taxpayers recently received an unexpected penalty by the IRS. The problem? These taxpayers underpaid their estimated taxes.

When does a tax penalty apply? Essentially, a penalty may apply if a taxpayer does not pay 90 percent of his or her tax obligations throughout the year.

Proposed tax changes finding resistance

Early proposed ideas to cut personal tax rates and simplify the income tax filing process have already garnered vocal resistance from several key interest groups. Supporters of the proposal to double the standard deduction - a move that is expected to make tax easier by limiting the number of individual filers who itemize - say that such sweeping change is necessary to make the cumbersome tax code more user-friendly.

Proponents of the changes argue that it may be simpler, but that it could have long-lasting, catastrophic consequences, in particular for charities, non-profit organizations and the housing industry.

Tax reform difficult but desperately needed

The tax code is, in a word, complex. It is thousands of pages long, with millions of different entries representing credits, deductions, exemptions, reporting mandates, caveats, loopholes and more. Legislators across the political aisle all agree that significant tax reform is desperately needed by Americans of all economic strata, but concede that it no prospects are currently forthcoming to make viable changes.

While there are no significant tax reform proposals from either party currently up for debate in Congress, leading Democrats are indicating that they'd only support reform under certain circumstances, including:

Avoid these three common errors when renewing your ITIN

Individual Taxpayer Identification Numbers (ITINs) are numbers that are issued by the Internal Revenue Service (IRS) for those who are not able to get a social security number but still have tax obligations. Some of these numbers are up for renewal this year.

Is my ITIN up for renewal? Those with an ITIN with middle digits 70, 71, 72 or 80 and who anticipate a tax filing requirement in 2018 will likely need to renew.

IRS Chief voices concerns about future of tax collection efforts

The Internal Revenue Services (IRS) commissioner recently testified at the Senate Financial Services and General Government Subcommittee hearing on the potential for serious issues in future tax collection efforts.

Ultimately, his message is that the agency continues to receive subpar funding. Without proper funds, he contends, the agency cannot perform its job well. This could lead to questions about where tax dollars are going. Such questions could build and begin to have an impact on the willingness of taxpayers to comply with current tax laws.

Congress considers new way to tax the sharing economy

The sharing economy has proved a conundrum for the Internal Revenue Service (IRS) for years. How can the federal agency efficiently tax a market that operates almost solely online; an economy that involves an exchange generally just between two people?

It appears the federal agency may have found an answer.

Understanding disaster-based tax credits and deductions

We are now in the thick of the Atlantic hurricane season, something many of us in Texas have to be concerned about, particularly if we own property along the Gulf. Of course, summer also frequently brings severe thunderstorms to our state, complete with damaging hail, straight-line winds, tornadoes and devastating lightning strikes.

You may be wondering why a tax blog is discussing Texas' weather patterns, but the reason for that is simple and something that many people are unaware of: the IRS has established certain deduction protocols and exemptions that are available to people who have suffered extensive property losses or incurred substantial expenses as a result of a natural disaster.

IRS reboots outsourcing tax debt collection – will it fail again?

The Internal Revenue Service (IRS) is trying to reboot efforts to outsource tax debt collection efforts.

What does this mean? This means that four different companies are now allowed to contact and demand payment from taxpayers. The companies are CBE Group, Conserve, Performant and Pioneer. Any other company claiming to act as a private agency on behalf of the IRS to collect tax debt is likely a fraud. 

International soccer star faces allegations of tax crimes

Lionel Messi is known throughout the world for his soccer abilities. The sports star has made millions off his success, making a profit from both his actual sporting ability as well as his image.

Unfortunately, his image took a hit when he was accused of tax fraud in 2016. The accusations included use of shell companies in an attempt to thwart tax collection efforts

PEOs aren't without their downsides

As we've discussed in a previous post, there are several positive aspects of using a Professional Employer Organization (PEO). Partnering with a PEO can result in significant cost savings in terms of health and unemployment insurance premiums, as well as much less hassle in terms of payroll, human resources issues and tax obligations.

Obviously, using a PEO will be a viable solution for many small businesses, particularly when it comes to concerns about the ever-increasing costs of insurance coverage. PEOs are able to essentially "buy in bulk" to source insurance, and have the power to negotiate discounts with insurers that the proverbial mom-and-pop small business simply cannot wield.

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