Tax News From Around the Nation

Spiraling National Debt - First Detroit, Who's Next?
Glenn Hubbard and Tim Kane opined in the New York Times that both political parties have misjudged the effect of the nation's spiraling debt will have on near term growth and long term national security. Read more.

Group Advocating Tax-free Savings Accounts for Home Buyers
A coalition that includes real estate developers and investors has been floating the idea of IRA-ish tax free savings plans as part of a package of reforms intended to overhaul federally funded real estate programs. Read more.

Proposals to Eliminate the Cap on OASDI Unlikely to Pass, WSJ Says
There is a limit on the amount of earnings subject to Social Security's "Old-Age, Survivors and Disability Insurance" program, known as "OASDI" for short and proposals to either eliminate or increase it sharply, have little chance of passing through Congress in today's economic climate.

For 2013, that limit is $113,700, up from $110,100 in 2012. The increase reflected changes in a national average wage index. For more details, see the Social Security Administration's website (ssa.gov).

There is no limit on the amount subject to Medicare taxes. Starting this year, many upper-income taxpayers have to pay an additional Medicare tax of 0.9% on earned income exceeding a certain amount. The threshold generally is $200,000, or $250,000 for joint returns.

If you work for two or more employers during a year, make sure to keep track of the total amount of Social Security tax that was withheld from your pay. Check to see whether you paid more than you owed. (IRS Publication 17 has details.) If so, you can claim the excess amount as a credit against your federal income tax.

IRS Sends Threatening Letter to Approximately 20,000 Employers 
According to Accounting Today, the Internal Revenue Service has sent threatening letters to some 20,000 employers accusing them of possible income underreporting based on reports it has received on their debit and credit card transactions.


And House Small Business Committee chairman Sam Graves, R-Mo., has written a letter to the Internal Revenue Service complaining about it.

“We have heard from tax practitioners whose clients are small business owners who have received letters from the IRS titled Notification of Possible Income Underreporting,” he wrote to Faris Fink, the commissioner of the IRS’s Small Business/Self-Employed Division, in a letter last Friday. 

“First, although my staff met with you and your team, you assured us that the IRS is merely seeking additional information, the initial sentence of the notification letter begins, ‘Your gross receipts may have been underreported.’ This gives the impression that the IRS is looking for more than just additional information. To the contrary, the letter implies that this is a serious matter that could lead to assessments of additional tax, penalties and interest.” Read more

Innocent Spouses Given More Time to File
On Monday, the IRS issued a new regulation that proposes to expand from two to 10 years the amount of time that taxpayers could apply for innocent spouse relief so they are no longer responsible for the tax debts of estranged spouses. Read more.

Married Same Sex Couples Likely to See Tax Increase
The increase probably would result from phasing out income tax credits for families, depending on the distribution of income between two working spouses, now that same-sex couples will be required to file joint returns with the Internal Revenue Service, according to a Congressional Research Service report.

Read more.

If you'd like to speak with one of our accounting professionals, please call us at 502-896-2999 or visit our website at http://nmscpas.com

New tax saving tips posted on our website

Check out today's tax saving tip at http://nmscpas.com/how-to-save-money-on-taxes-tip-5

If you need help with your taxes or if you have a need for financial related business advice, visit our website at http://nmscpas.com!

Tax Week

New Pages Added to Our Website

- We've added some new pages to our website at http://nmscpas.com and we hope you'll find them useful. We've set up links where you can go and download Kentucky and Indiana business tax forms. Check it out!

Former KPMG Partner Pleads Guilty

- Scott I. London, a former senior partner with the accounting firm KPMG whose clients included Herbalife and Skechers USA, pleaded guilty on Monday before a federal judge in Los Angeles to a charge of securities fraud arising from his involvement in insider trading. Read More

Companies Plan to Increase Outsourcing

- IT, accounting and finance administrative processes dominate the future outsourcing plans of major companies, according to a new survey by KPMG.

Roughly half of major enterprises intend to increase the volume of their application development and maintenance outsourcing during 2013, while about 40 percent intend to increase their finance and accounting outsourcing. Read More

PCAOB Considering Deregistering Accounting Firms

- The Public Company Accounting Oversight Board is taking a close look at the nearly 1,000 accounting firms that have registered with the PCAOB although they do not audit public companies or broker-dealers, and may decide to drop many of them. “Currently 923 firms are registered with the PCAOB even though they do not conduct audits that would subject them to mandatory PCAOB registration,” said PCAOB member Jeanette Franzel. Read More

Governments To Review Multinational Tax Avoidance

- The international Organization for Economic Cooperation and Development has produced an action plan at the request of the G20 finance ministers to address the problems of base erosion and profit shifting that are depleting corporate tax revenue as multinational companies transfer their profits to low-tax countries. Read More

Online Sales Taxes Targeted for Collection

- Conservative economist Dr. Arthur Laffer has co-written a study that identified a positive economic impact in efforts to require online retailers to collect sales taxes from customers on Internet purchases. The study was released by the Alliance for Main Street Fairness, a group that has been pressing for passage of the Marketplace Fairness Act, which was passed by the Senate in May, but has not yet been voted on in the House.

Venture Investing On the Upswing

- Venture investing rebounded in the second quarter from a slow start to the year, returning to the levels of late 2012 on a surge of early stage investing.

Venture capitalists in the United States put $6.7 billion to work in 913 deals from March to June, according to the MoneyTree Report from PricewaterhouseCoopers, the National Venture Capital Association and peHUB publisher Thomson Reuters. Read More

Small Business Owners Vacationing Less

- Small business owners are working more hours, extending their workweeks, and taking less vacation than they were five years ago, according to the 2013Sage Reinvention of Small Business Study, a Sage North America survey focused on how small businesses are changing the way they conduct business in a recovering economy."The latest reinvention survey reveals the true reality that many small business owners are facing: that they continue to show resilience in the face of an anemic recovery, all the while increasing their management acumen to ensure their businesses are successful," Connie Certusi, executive vice president and general manager of Sage Small Business Solutions, said in a written statement. Read More

House Republicans Pushing for More Extensive Tax Code Makeover

- The top Republican tax writer in Congress is being pulled toward a more extensive rewrite of the U.S. code, with about half his party's members in the House backing proposals to rip up the rules. More than 100 House Republicans have supported proposals to end the income tax, halt audits for six months, and terminate the entire code in 2018 to force Congress to create a simpler system. Sixty-eight of them favor what they call a "fairtax," replacing the income, payroll and estate levies with a national sales tax. Dozens back estate-tax repeal proposals. A flat-tax bill has 10 Republicans on board. Read More

Top 10 Considerations for Employee Benefit Plans After Windsor

- The recent U.S. Supreme Court decision in U.S. v. Windsor struck down §3 of the federal Defense of Marriage Act (DOMA) as unconstitutional, and held that the federal government must recognize and accept same-sex marriages recognized under state law. As a result of theWindsor decision, the definition of "spouse" under any federal law governing employee benefits must now be interpreted to include same-sex spouses recognized under state marriage laws.

If you're looking for an accounting firm that can provide you with fresh new ideas, contact Neikirk, Mahoney & Smith today at (502) 896-2999 or by submitting our form.

How to Save Money on Taxes - Tip 4

Leave no tax deduction or credit unreported. Making certain that you don't leave any deductions on the table is the single best way you can save money on your taxes. With the IRS, the rules are always changing, so keep up with them, but if you do, the rewards will be there. And don't be afraid to take all the legit deductions you have available. Have courage. Like the TV commercial says, it's your money. 

 

And pinching pennies may be a noble way to think in some cases, but when it comes to your taxes its totally worth it to hire a good CPA. You'll avoid a lot of unnecessary headaches and a tax professional's knowledge of the tax code can help you save money.

 

It's okay to use tax software programs when filing your taxes. Today's options are quite helpful and they are programmed to give sound advice in certain areas, but robotic responses don't generally allow for much give and take discussion. And the IRS offers quite a bit of sound information if you can work your way through the verbiage. 

 

And check your work. And then check it again. Make sure it's complete and that you've signed and dated it. If you make a mistake, it could trigger an audit, something that is about as much fun as a root canal. 

 

If you can't file your taxes on time, don't forget to file an extension. And make sure you send them some money, if you'll have to pay additional taxes. If you don't pay at least 90% of what you'll owe, they can hit you with some very steep penalties.

If you have questions, call Neikirk, Mahoney & Smith at 502-896-2999.

FASB, AICPA Partner to Simplify Accounting for Small Businesses

The American Institute of Certified Public Accountants and the Financial Accounting Standards Board, trade groups that manage and supervise standards used in the accounting profession, has announced that it is has created a “framework” that would simplify accounting for such companies. It would differ from the “generally accepted accounting principles,” or GAAP, that public companies must follow in a number of ways, large and small.

The goal is to make accounting-related life for small businesses (companies that are not publicly traded) easier to manage. Click here to read more

Congress Looking at Closing Some Loopholes

Congress has begun the process of reviewing current corporate tax reforms. With the highest statutory tax rates in the world, the pressure is beginning to mount internally as other world economies are trending up while the US economy shows signs of lagging.

The House Ways and Means Committee held a hearing Thursday to examine corporate tax reform and the impact of offshore tax havens on base erosion and profit shifting by multinationals.

House Ways and Means Chairman Dave Camp, R-Mich., noted that the U.S. "has the highest statutory tax rate in the industrial world of up to 35 percent," according to an article in Accounting Today.

Camp said that advisors have "offered a universal observation—having the highest corporate rate in the developed world along with an outdated international tax system is a barrier to success that leaves our country falling further behind our foreign competitors.” 

Click here to read the full article

Fasten Your Seatbelt - Gas Going Up Again

Gas prices are going up again in the Commonwealth and this time you can't blame the dealers, their wholesale suppliers or the Arabs.

This latest price increase comes courtesy of our state government in Frankfort and although July's scheduled 2.4 cent increase doesn't sound like much, when you consider that the total take on every gallon of gasoline that the state pockets is now 32.3 cents a gallon or approximately 8.5% of the cost of every gallon you pump.

When combined with Uncle Sam's take, 18.4 cents per gallon, local taxes that can vary and a smidgeon of a percentage that goes to a fund that cleans up gasoline tank seepage, Kentuckians pay more than 50 cents a gallon, or approximately 14%, in taxes.

Gasoline taxes are the result of a slew of state and federal tax laws intended to raise funds to keep highways maintained. In Kentucky, the increase is automatic and tied to the average wholesale price of gas. That law has resulted in periodic small increases in our gas tax rate that have aggregated into a rather significant chunk..

The rate has nearly doubled in the past ten years, from 16.4 cents to the new 32.2 cents.

The tax was tied to the wholesale price because of concern that soaring gas prices would cause motorists to buy less gas, causing revenues for road work to plunge while the cost increased.