September 5, 2013 Client Newsletter

I did a bit of traveling last month. Driving to New Orleans to attend the IRS Nationwide Tax Forum and the Detroit area to visit my son and daughter in law.  I have to tell you that things are, at least anecdotally, looking better outside the State of Illinois.

For example in Canton, Mississippi just north of Jackson, the nine tenth of a mile long (I actually used my odometer while driving back on I 55 because it really has to be seen to be believed) Nissan assembly plant added 1,000 new jobs last year.  Its’ payroll now exceeds $200 million dollars.  The plant is non unionized.  The governor of Mississippi, Phil Bryant, is adamantly opposed to attempts to unionize the plant.  In the local media I found this quote from him, "I don't believe personally, that we would see this growth in the automobile industry, to include Toyota and Nissan and the many suppliers, if we had union growth in the state of Mississippi" said Bryant. Imagine an Illinois governor making that statement.

Local author Elmore Leonard was buried in Birmingham Michigan the day we had dinner at a local restaurant.  Despite the Detroit bankruptcy we found that this suburb of 20,000 was not participating in the hard times shared with its neighbor.  

As we ate dinner outside, I could not believe the parade of luxury cars driving past.  It seems that every other car was either a BMW, Lexus, or Mercedes.  We even caught sight of a Bentley.  Not an American branded car in sight it seemed.  Ironic. Granted Birmingham is an affluent suburban community.  And the news of the day was the city of Birmingham, Michigan settling a lawsuit with a woman who was arrested for protesting in front of a local fur retailer. And that CNN named Birmingham, Michigan one of the hundred best places to live in the United States. Even in the shadow of Detroit, and all its issues, this city just seemed to have a vibrant downtown filled with local small businesses that you have a hard time finding here.  

Onward to the IRS Nationwide Tax Forum.

The most attended seminar highlighted the changes for 2013 taxes filed in 2014.  I have summarized the changes that were highlighted at the seminar.

1. Schedule A deductions will be limited by income.  Specifically if you are making more than $250, 000 per year you will see a limit on the amount of itemized deductions you will be able to take.
2. The business mileage rate has been increased to 56.5 cents per mile.
3. IRA deductions have been increased to $5500.00 per year.  It you are 50 plus you can now deduct $6,500.
4. There are now six different tax rates.  The highest rate is now 39.6%.  This rate does not take into account even additional excise and medicare taxes which push the effective rate even higher.
5. Schedule D Capital gain rates are now 15% unless your income is over $400,000.  The Capital gain rates will then be 20%.  Unless you tell your broker otherwise, they will sell the last securities you purchased first, instead of the first securities you purchased.  
6. Medical expenses are not harder to deduct.  Unless you are over age 65 you will not be able to deduct any medical expenses under 10% of your adjusted gross income.  The old threshold was 7.5%
7. There is an additional medicare tax of .9% for all incomes over a certain threshold starting at $200,000 for single taxpayers.  This new tax is the first employment tax ever related to 1040 income and the IRS believes that it will catch some married taxpayers by surprise.
8. The per diem Office in the Home deduction of $1,500 is a victory for small business owners.  We talked about this new “legitimized” deduction in a previous newsletter. Available online at our blog.
9. New rules for Schedule D Capital gains reporting now allows us to report sales in the aggregate.  I attended one of the best seminars at the forum presented by an accountant from New York who was cariticture in himself.  He detailed the real problems certain stock brokerages are having meeting record keeping requirements. The bottom line is the large brokerage houses are just not following the reporting law.  In addition the IRS has issued the new draft 2013 1099 B form that now has 32, yes count them, 32 boxes.  That is 13 more boxes than the 2088 1099 B form.  I pity the poor person who is foolish enough to try to prepare a Schedule D on their own this year.
10. Innocent spouse relief is now easier than ever to get from the IRS. If you spouse is up to no good you do not have to pay tax liabilities that were clearly not your making. In the past this has been a somewhat daunting chore.
11. The IRS continues to step up its’ program to find non filers.  The penalty for not filing your tax return is 5% a month up to 25% of the tax due.  And that penalty is not the only one that is being assessed at record numbers.  Additional penalties and interest will be assessed for not filing and evidently harder to abate.

Apparently Obamacare is pushing a lot of businesses to turn employees into independent contractors.  The IRS relies upon referrals from states, specifically from workers compensation claims.  State audits always lead to IRS referrals and subsequent IRS audits/inquiries.  I am passing this on to you verbatim from one seminar, “Independent Contractors versus employees is not a choice. It is the law.”  So you are warned this is one area that IRS is taking a very close look at. Something that they seem to be telling us every year.

Not to muddy up the subject is the Deno Trucking case.  This trucking company treated all its drivers from day one as independent contractors. The case wound its way through the courts with a victory for the taxpayer. The IRS lost because the Ohio courts found in a workers compensation case that the driver was in fact an independent contractor, for workers compensation purposes, and not an employee.  The court did find that the non taxable per diem paid to the drivers was unreasonable and is meriting a closer look by the IRS examiners. Non taxable per diem for truck drivers continues to be a growing trend in the trucking industry.  It is legal to a point.  However, some companies are paying their drivers almost half of their total pay as reimbursement for meals and other expenses that are totally out of whack with reality.  And that means trouble.

Next month the Affordable Healthcare Insurance Exchanges will be open for business. And it appears that insurance costs are going up as a result.  I just heard on the NPR Marketplace program today that large labor unions are opposed to the changes.  Apparently the law will undercut and decimate generous union healthcare plans. The president of Laborers International Union of North America, Terry O'Sullivan, warned that he anticipates the Affordable Care Act will come with "destructive consequences" in a letter written to President Obama and Congressional leaders. O'Sullivan cites particular fears for construction workers, who are often covered by multiemployer plans. Under the Affordable Care Act, there is a $63 per-person penalty for such plans, a tax that O'Sullivan anticipates will come out of the pockets of the workers he represents.

The repercussions of an increase in the cost of health insurance will extend beyond this initial deduction. It will dismantle current collective bargaining agreements, thus making union companies less competitive and nonunion companies more attractive.

By the way insurance premiums for the Illinois Health Care Exchanges appear to be a big mystery.  The Chicago Tribune speculated on August 14, 2013 that due to a lack of competition the premiums are likely to go up.

Illinois officials once expected that as many as 16 insurers would sell some 250 health plans via the exchange. But only six insurers, including the state's largest, Blue Cross and Blue Shield of Illinois, have signed up. They will offer 165 insurance plans. UnitedHealthcare, the state's second-largest insurer, decided not to participate.

Does the relative lack of competition, the absence of a big player like UnitedHealthcare and the Obamacare demands for certain coverages mean that Illinois rates will be higher than they are now?

Sounds like a real possibility. But Illinois officials won't say if bad news is coming. Maybe they're waiting for the PR firm that was awarded a $35 million contract last month to promote the Illinois exchange to get up to spin speed.

After attending the IRS Affordable Health Care session I couldn’t help but notice three women discussing the session after it broke up.  One woman was as angry as angry could be.  She was just livid about the record keeping burdens the law was placing on her clients including the months during which each employee and any of their dependents was covered by health insurance. IRS cannot process the amount the tax forms required to meet this recordkeeping requirement she argued.  She was also upset about UPS’ decision to drop spouses from their healthcare plan.  It was just announced that day.  Maybe she was married to a UPS employee.  According to Marketwatch, by denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act. This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26), but husbands and wives are optional.

Enough about all this upbeat stuff, I will write more about the IRS Nationwide Tax Forum next month.  

                       

Another True Story from the Illinois Department of Revenue Taxpayer Assistance at the Willard Ice Building

The Illinois Department of Revenue Taxpayer Assistance office has become a training center for new employees.

We continue with puzzling solutions to our client's problems


"We have no way to tell whether the documents had been received even if we cashed the check you sent with them.  But give another copy of what you sent in, I will stamp it, and then if you get any more correspondence bring it to me."

September 4, 2013 Taxpayer Assistance staff trying to make sense of the computer screen.

I am having a difficult time feeling sorry for these guys

Ran across this post on Yahoo's front page.  Apparently if you are a contestant on the Price Is Right and you win a prize you have to pay some taxes on your winnings.  But there is even more wining.

"I think a lot of people don't understand what they're getting themselves into. They're just like, 'Oh my God, I'm going to win a bunch of stuff,' and then they're going to have to forfeit their prizes because they can't afford to pay the taxes on them," she said. 

As for Schwartz's other prizes, the pool table and shuffle board table were worth an estimated $14,000, but Schwartz sold them for $4,500 on Craigslist because they were too big to fit into her small apartment. "I took a bite on that one," she said. Because the game show will only deliver to the winner's home address, if a prize (say, the ever-popular bedroom set) is too large, the winner will have to pay for shipping to an alternate location. Schwartz was fortunate that the vendor agreed to store the items for the couple of months it took her to unload them.


Read more my clicking on this link

August 2013 Client Newsletter

Operating your business as a small business corporation allows for many tax saving opportunities. However, it does present some complications, especially concerning the way the shareholder/owner takes money out of the business.  Not in a bad way.  Just a little more complicated.

I strongly, no very strongly if that is possible, encourage business owners to meet the IRS requirement that you pay yourself a salary. By paying yourself a salary you are paying social security taxes (a good thing since they are fully refundable come age 65) and unemployment taxes. Do you own a seasonal business?  By paying unemployment taxes you can lay yourself off during the slow periods and collect unemployment benefits until business picks up.  Unemployment benefits are not available to sole proprietors or partnerships.  Only shareholder/owner can take advantage of unemployment benefits.

However taking a salary is not the only way you can take money out of your business.  Please make sure you are reimbursing yourself for out of pocket expenses. Whether it is a newspaper subscription, auto insurance or  the cell phone bill for example you should be either paying these bills directly from your corporate checking account or reimbursing yourself with a check made payable to you clearly listing the reimbursement.

Do you operate your business out of your home office?  If so, make sure your corporation is paying you rent for the space your business operates out of.  The amount of rent you pay yourself should be market driven.  Something that our office can help you with. By paying yourself rent you can then deduct a portion of your home expenses that relate to your home office.  Although the home office deduction has a stigma attached to it....I wish I had a dollar for everytime a client asked me that they didn’t want to take the deduction because it was a “red flag”...nothing could be farther from the truth.  Recently the IRS has issued a simplified method for small business owners, such as you, how to take the home office deduction using a standard rate.  So much for the “red flag”.  Home office deductions are extremely valuable deductions and should not be overlooked.

And finally don’t forget to take profit distribution.  Simply put since you are going to pay taxes on the net income of your business, you are entitled to that profit.  We run into problems if the distributions exceed your profit, or if distributions are not based on profit, but rather appear to be salary, taking money out of the business should not be an issue.

With that in mind remember your business is unique.  My office is here to help.  If you have questions about the best way to take money out or your business, I strongly encourage you call us.

The experts call us micro business owners or solopreneurs.  By definition we are very small-scale business, especially owner-operated with few employees. I stumbled across this very interesting definition of what is a micro business from the US Legal website:

The majority of micro business companies are one-person enterprises. Moreover, these companies operate out of owner’s homes or a small executive suite office; and many of these companies have part-time help from a family member or friends. Micro business are conducted by tradespeople, professionals, doctors, designers, artists, writers, consultants, inventors, technicians, craftsmen, manufacturers, or workers from a variety of other disciplines.  Majority of these companies are not operating in this model to become rich, but rather to enjoy a superior level of autonomy and freedom that is typically unavailable to an employee.

If you are like me I don’t think I can ever go out and work for someone else despite the cut in pay.  It is true  business ownership has as much to do about freedom, and maybe a dose of ego, as it does about money.  Maybe that explains why we face the numerous uphill battles we face every day when we put the key in the door of business every day.  

Continuing our monthly review of the status of Obamacare as we get closer to the law’s implementation (October 1, 2013) you may have missed a significant change in the law’s regulations announced July 2, 2013.  It is my belief that this change relates directly to the inability of the IRS to implement the law.  Obamacare has proven to be quite a challenge to the IRS.  In fact, the IRS’ inability to finish writing regulations and program their computers in order to process the employer mandated health insurance coverage for their employees, has been cited by several sources as to why the decision was made to put a hold on the employer mandate.  The agency has been saddled with an expanding workload and relatively flat funding levels for years that have left the IRS unable to adequately perform its primary duties.  Hopefully you haven’t had to call the IRS lately, but I do, sometimes daily, and it is not unusual to be put on hold for more than 45 minutes before you can talk to a representative.  In fact recently the IRS has simply hung up on me and directing me to call on another business day when the call load was not as large. But I digress.

According to Reuters:

Days after delaying health insurance requirements for employers, the Obama administration has decided to roll back requirements for new state online insurance marketplaces to verify the income and health coverage status of people who apply for subsidized coverage.

President Barack Obama’s healthcare reform law is slated to begin offering health coverage through state marketplaces, or exchanges, beginning October 1, 2013. . But to receive tax subsidies to help buy insurance, enrollees must have incomes ranging from 100 percent to 400 percent of the federal poverty line and not have access to affordable insurance through an employer.       

                                     

Days after delaying health insurance requirements for employers, the Obama administration has decided to roll back requirements for new state online insurance marketplaces to verify the income and health coverage status of people who apply for subsidized coverage.

President Barack Obama’s healthcare reform law is slated to begin offering health coverage through state marketplaces, or exchanges, beginning Oct. 1. But to receive tax subsidies to help buy insurance, enrollees must have incomes ranging from 100 percent to 400 percent of the federal poverty line and not have access to affordable insurance through an employer.

Until now, the administration had proposed that exchanges verify whether new applicants receive employer-sponsored insurance benefits through random checks. It also sought to require marketplaces to verify each enrollee’s income status. But final regulations released quietly on July 2, 2013 by the Department of Health and Human Services (HHS) give 16 states and the District of Columbia, which are setting up their own exchanges, until 2015 to begin random sampling of enrollees’ employer-insurance status. The rules also allow only random – rather than comprehensive – checks on income eligibility in 2014.

The changes, which point to new technical and bureaucratic challenges at the state and federal levels, raise new questions about the how successfully Obama’s Patient Protection and Affordable Care Act will be implemented. The law is scheduled to go into effect on Jan. 1. But the administration’s latest move acknowledges that exchanges need extra time to get their verification systems in place.

Earlier, the administration also announced that it would not require employers with 50 workers or more to provide insurance benefits until 2015, a one-year delay that stirred speculation about the possibility of further delays.

The regulations, contained in a 606-page HHS rule, allowed state-run exchanges to accept an enrollee’s “attestation regarding enrollment in an eligible employer-sponsored plan.” Marketplaces to be operated by the federal government in 34 states will still make random checks to verify applicant insurance status in 2014, it said.

“For income verification, for the first year of operations, we are providing (state and federal) exchanges with temporarily expanded discretion to accept an attestation of projected annual household income without further verification,” the rule said.

In response to the regulation changes  the House Committee on Energy and Commerce sent a letter to HHS Secretary Secretary Kathleen Sebelius on the administration’s recent decision to abandon a verification process for exchanges requesting additional information.

Writing to Sebelius the committee wrote, “both the HHS final rule and the Treasury announcement raise troubling questions about the status of the administration’s efforts to implement the PPACA and to what extent the exchanges will be operational by the time enrollment begins on October 1, 2013. The administration has had three years to implement the PPACA, yet in the span of just three days, two agencies have used administrative actions to significantly change fundamental requirements of the law.”

It is going to be interesting.  My guess is that it is not going to be a good start but that really is stating the obvious.

The Illinois Department of Employment Security (IDES) has fired its collection agency.  As long as I can remember, if you were an employer and didn’t file a quarterly tax return, IDES files one for you.  It didn’t matter if you had employees or not.  It didn’t matter if you were still in business or not. It didn’t matter if you owed any tax or not.  IDES assesses what they believe is owed, and up to last month, turned the collection of the “phantom liability” over to the Texas based collection agency GC Services potentially dinging your credit score.  Apparently the lack of results, since the majority of their accounts turned over to collection were for non existent business and/or liabilities, and the cost of their “collection fee” resulted in the change in policy.  At least that is what one of the newly hired “in house” IDES collection employees told me yesterday.  No insight as to whether they were going to continue to policy of assessment of taxes when a business doesn’t file their tax returns.  I only can assume it is going to continue the policy.

Wtf...Forbes magazine reports that IRS Union wants out of Obamacare

Members of Congress and their staff are already seeking exemption from being required to be enrolled in Obamacare health exchange.  Now we are leaning that three of the largest unions, including one that represents IRS employees, in the nation are also seeking to opt out.

Forbes magazine writes..


In the private sector, many workers are concerned about losing their employer-sponsored health insurance coverage, and being dumped into Obamacare’s subsidized insurance exchanges. Two weeks ago, representatives of three large labor unions fired off a harsh letter to Democratic leaders in Congress, complaining that Obamacare would “shatter…our hard-earned health benefits” and create “nightmare scenarios” for their members. Today, we learn that the National Treasury Employees Union—the union that includes employees of the Internal Revenue Service—is asking its members to write letters to their Congressmen, stating that they are “very concerned” about legislative efforts requiring IRS and Treasury employees to enroll in the Obamacare exchanges.



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Implications of the Defense of Marriage Act

On June 26, 2013, the Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA) in U.S. v. Windsor. The decision has broad tax implications.

For one, same-sex couples can now file joint federal tax returns if the couple lives in a state that recognizes their marriage. It should be noted, however, that joint returns aren’t always beneficial. If both partners in a same-sex marriage have high taxable incomes, filing a joint return could result in more taxes being paid. For example, the modified adjusted gross income threshold amounts for calculating the net investment income tax, which applies for tax years after 2012, is $200,000 for taxpayers filing as single, $250,000 for couples filing joint returns, and $125,000 in the case of a married taxpayer filing a separate return.
In light of these considerations, we need to to assess the impact of filing a joint return for 2013. We should also review whether it would be beneficial for you to file amended returns for prior tax years for which you were married and for which the statute of limitations remains open.

Another result of the Supreme Court decision is that tax-free employer provided benefits to married same-sex partners that were previously includible in income under federal law are now excludible from income, so refunds can be claimed on this basis.

Also, the estate of a partner in a same-sex marriage is entitled to the marital deduction, which means the partner’s estate passes tax-free to his or her spouse. Other benefits of the Court’s decision include married same-sex partners now being eligible to receive federal benefits if their partner is a federal employee, as well as partners now being eligible for social security survivor benefits upon the death of a partner.

The DOMA ruling has also opened a Pandora’s box of tax questions which will be answered by future IRS guidance and court decisions:

(1) It is uncertain whether a same-sex couple that lives in a state that doesn’t recognize same-sex marriages but travels to a state that does recognize such marriages and gets married, will be treated as married for federal tax purposes.

(2) If an individual is married to a same-sex partner in a state like New York that recognizes such marriages, the fair market value of employee benefits received as a result of such marriage are excludible from the non-employee spouse’s income. But, it’s unclear what happens if the employee is transferred to a state that doesn’t recognize same-sex marriages. For example, could previously tax-free spousal benefits be converted to taxable non-spouse benefits?

(3) For the current year, it’s not clear what happens if one partner in a same-sex marriage has already filed his or her 2012 Form 1040 as single while the other partner is on a valid extension, with the expectation of filing by the October 15 deadline. Assuming they don't choose to amend both to married filing jointly (MFJ) (which presumably would be allowed), can the spouse on extension file as single or is the spouse required to file as married filing separately (MFS)?

(4) If one partner in a same-sex marriage amends his or her return from single to MFS (e.g. to reclaim imputed income from a spouse’s employment benefits), it’s unclear whether the other is also forced to amend his or her return.

(5) It’s unclear what happens in a situation where a same-sex couple has a child and one spouse filed as head of household in prior years and received child tax credits and earned income credits. For example, is the couple now required to amend as MFJ or MFS and could the spouse who took the credits be forced to return such credits?

(6) From an employer’s perspective, it’s uncertain how the Windsor decision will affect employment benefit plans for employers in different states. For example, will private companies need to consider providing spousal benefits to same-sex married employees regardless of which state the employee lives in?

We expect there will be a lot of future guidance on these and other issues.

While the full impact of the Supreme Court’s decision will not be known for a while, there are important and time-sensitive planning opportunities available now with respect to your taxes.
Please call me at your earliest convenience so we can discuss the impact this decision has on your particular situation.

June 27, 2013 Client Newsletter

Chances are you got into owning your own small business the same way I did.  I was working for another accounting firm whose clients liked me and really hated my boss.  And because I knew how to do  accounting and tax, I started my own business and never looked back.  I have been in business for more than thirty years.  I have seen my share of clients go out of business.  But I have also seen my share of clients succeed at self employment.  I have one client who has been with me since the beginning in 1982.  She is special.

There are many reasons people start their own business.  Unemployment is one reason.  Early retirement and a weak employment market has forced many people who never dreamed of owning their own business into self employment.  However, the principal reason people seem to start their own business is because they know how to do it.  Thus the accountant starts a tax business, the carpenter starts a construction firm, or the cook opens a restaurant.

We all seem to suffering from the same misbelief.  Knowing how to do what your business does is the key to success.  When in fact nothing can be farther from the truth.  In fact some small business consultants preach that the fact that you do know how to do it is the least important factor in making a small business successful and profitable.

How do I know that?

According to the United States Census figures 85 percent of small business start ups will fail in the first year. And 50 percent of the survivors will fail after the fifth year.  Even after ten years 33 percent of the small businesses will fail after The numbers are stunning.  If you have lasted more than five years, congratulations you are a survivor.  And if you have been in business for more than ten years you are a masochist.  Just kidding.

Granted this survey included many small businesses that really are not what I would consider startups.  Many are people looking to supplement their income from what I call network or multi level marketing companies. You know what I mean.  They are designed to sell products through a party.  Amway, Avon, Mary Kay, Herbalife and the like come to mind.  Traditionally the turnover of new “small business owners”  can equal 100 percent for some of these companies.  At one time Amway focused more on the tax benefits of being a small business owner than on the profit from selling its products.  This focus raised the wrath of the IRS caused many audits and almost decimated their selling force back the1980’s.

During the next few months I will be writing to you about the things that I believe these long lasting small businesses are doing to survive.  

One thing that seems to be universal to success is following the rules.  Not paying attention to the details will really come to haunt you in the future.   Back in July 2012 I wrote:

“If you want to claim the benefits of a corporation, you've got to actually use the corporation for business, not just pass funds through the corporate bank account. In one case the Tax Court disregarded the taxpayer's corporation, finding it to be a sham. The corporation observed none of the formalities of a corporate entity such as shareholder meetings, issuing stock certificates, invoices were not made out in the corporate name, etc. The Tax Court attributed all the income to the taxpayer. There can be non tax consequences too. To be sure you don't make the same mistake, we suggest you should talk to us your trusted tax adviser.  We have available at no charge to active clients, all the boilerplate templates you need to keep your corporation in compliance. All you have to do is ask.

Following up on last months suggestion that you should be taking a look at your  recordkeeping,  I found the case John H. Schoppe (T.C. Memo. 2012-153) in which the Tax Court found the taxpayer's records were inadequate to substantiate claimed deductions. The taxpayer kept track of his daily expenses on a calendar, but with only vague notations of the amounts and payees. Auto mileage records did not include the business purpose. At trial, the calendars were not offered into evidence and witnesses the taxpayer claimed could substantiate commissions paid, were not called. The Court also noted it had no reasonable basis for applying the Cohan rule. The Court sided with the IRS in disallowing the deductions.   What is the best way to beat the IRS?  Keep good ironclad records.”

I learned something. I recently represented a client who being audited by the Illinois Department of Labor in a wage/overtime dispute.   If you are paying a salary to an employee that it is under $450.00 per week, you are required by law to have that employee keep time records.  Even if that employee is not being paid by the hour.  And this has been the law for more than 14 years.  

For the next few months I will be focusing on the upcoming implementation of Obamacare.

This month I am passing on an excerpt from CNN Money article about the subject authored by Jose Paglieri that makes the point that most small businesses will be not be affected by the law’s mandate to cover their employees....

It's been uttered by every opponent of health care reform: Obamacare will kill small businesses.

                       

But the new law's rules don't apply to the vast majority of small businesses. The employer mandate, which forces firms to start providing insurance in 2014, pertains only to companies with at least 50 full-time workers. That's a tiny fraction of small businesses.

As of 2010, there were roughly 5.7 million small employers, defined as those with fewer than 500 workers. Some 97% of them have fewer than 50 employees. That means Obamacare's employer mandate applies only to 3% of America's small businesses.    

                                                    That's about 200,000 companies.                        

The critics aren't convinced: "Small businesses don't have staff with the time and expertise to deal with the new system. It's a huge drain on these smaller firms," wrote U.S. Rep. Sam Graves (R-Mo.), House Small Business Committee chair, in a recent editorial for The Washington Times.                        

Why so much focus on so few firms?  A Graves spokesman said the affected businesses include fast-growing "gazelle" firms, the startups that contribute a disproportionate amount of the nation's new jobs.                        

"The more money these companies have to spend complying with health care mandates, the less they have to hire and expand," the spokesman said.                        

                       

Those costs aren't anything to laugh at. If they don't provide insurance, businesses with 50-plus workers face $40,000 in penalties and $2,000 for each additional full-time employee.                                        

However, nearly all of those businesses already do provide insurance: 96% of those with 50-plus workers currently offer health plans anyway, according to government data.                        

That most businesses affected by the mandate already provide insurance doesn't necessarily mean their insurance is good enough or sufficiently cheap under new Obamacare rules. That's the counterpoint made by U.S. Senator John Barrasso, a Republican from Wyoming.                        

                       

"The mandates are for a lot more coverage than the average person would want, need or can afford. The business is going to have to spend time, money and have to figure that out," Barrasso said.                

For example, firms might be providing insurance that Obamacare deems unaffordable -- that is, if it costs more than 9.5% of a worker's income. But there are signs that most plans out there qualify under Obamacare's other requirement. More than 99% of those in work-sponsored plans have insurance that meets most Obamacare coverage standards, according to last year's study by NORC at the University of Chicago.    

Putting it all together, the data shows that only a tiny sliver of the nation's small businesses face the new rules -- and even fewer face any changes. Of the country's 6.5 million workplaces, only 1% must actually start providing insurance next year.

And this just in...

“Today, the IRS is an institution in crisis. In my view, however, the real crisis is not the one generating headlines. The real crisis facing the IRS – and therefore taxpayers – is a radically transformed mission coupled with inadequate funding to accomplish that mission. As a consequence of this crisis, the IRS gives limited consideration to taxpayer rights or fundamental tax administration principles as it struggles to get its job done.”

- Nina Olson, National Taxpayer Advocate writing in her June 30, 2013 report to Congress about the IRS.

I guess I was too optimistic about getting our re-designed small business website including a podcast will be up and going this month.  We are still working on it and hopefully sometime in July it will be up and running. Cross your fingers. 

The Illinois Department of Revenue has mandated that tax preparers now must electronically file and electronically pay virtually all payroll and sales tax returns starting July 1, 2013.  This means that everyone who is now paying by check and filing paper returns will no longer have that opportunity.  Considering the continued issues the Department has had processing returns these days it may not be a bad thing.

The IRS Nationwide Tax Forums for tax preparers are back with a new format....last year they were geared toward the now found illegal registered tax preparer designation program and since I already carry a Treasury Card and was not affected by the program I chose to skip...they have pretty much mandated that your tax guy attend.   I chose the New Orleans location and will be attending in August.  Not exactly the best month to visit New Orleans but it is the sacrifice I will have to make. The seminar overlaps with the sales tax due date so we will be asking your cooperation in getting your information to us a little sooner than before. Thank you.   

                       

Our staffed office hours have changed.  We are open weekdays with a much earlier closing time this based more on work flow than the clock.  We are still available to meet with you evenings and weekends.  The only thing we ask is that you call us for an appointment.