Monday, March 2nd, 2015
The White House and the new Congress continue to look for common ground on tax legislation and tax reform in 2015. Both sides say tax reform is possible in 2015 and behind the usual rhetoric there seems to be a real drive to move tax reform in the 114th Congress. Reform could be similar to the comprehensive package moved nearly 30 years ago in the Tax Reform Act of 1986, or, as many observers predict, will take a new track to reflect a vastly different economy and Tax Code compared to 1986.
The two tax writing committees-House Ways and Means and Senate Finance-have so far approved a number of tax bills impacting individuals and businesses. Among the bills that House Ways and Means has marked up is legislation to:
- Make permanent Code Sec. 179 small business expensing ($500,000 dollar limit/$2 million investment limit, indexed for inflation)
- Enhance Code Sec. 529 college savings plans
- Extend and expand the charitable deduction for contributions of food inventory
- Enhance and make permanent the research tax credit
- Make permanent the reduced recognition period for built-in gains of S corporations
- Extend permanently the special rules for tax-free distributions from IRAs for charitable purposes by qualified individuals
The Senate Finance Committee (SFC) also has been busy with tax legislation. The SFC has approved, among other bills, legislation to:
- Modify the alternative minimum tax for small insurance companies
- Provide special rules for charitable contributions to agricultural organizations
- Create a Waste-Heat-to-Power investment tax credit
- Exclude from income certain compensation received by public safety officers and their dependents
- Require the IRS to notify exempt organizations before revoking exempt status for failing to file returns
- Exclude from Gross Income Certain Clean Coal Power Grants
- Create a Military Spouse Job Continuity Credit
House Speaker John Boehner, R-Ohio, has signaled his support for some of the bills. Boehner controls the House’s schedule and his support is necessary to bring bills before the full House for a vote. In the Senate, the new Majority Leader, Mitch McConnell of Kentucky, has said he wants to move tax legislation this year but has not provided any timetable for legislation. Because of Senate rules, bills generally come more slowly to the floor for a vote and often are subject to a lengthy amendment process. The Senate also generally requires a supermajority of 60 votes to approve tax legislation. Our office will keep you posted of developments as tax legislation moves forward.
All of the key players have voiced support for tax reform-President Obama, Speaker Boehner, Majority Leader McConnell-along with the chairs of the House and Senate tax writing committees. They differ on the scope of tax reform, how to pay for tax reform, and more details.
President Obama’s fiscal year 2016 budget recommendations, released in early February, could be a catalyst for tax reform, especially the President’s proposals for small businesses. Many of the small business proposals, such as enhanced Code Sec. 179 expensing, enjoy bipartisan support. As in past years, the hurdle of how to pay for these and other tax reforms is problematic. President Obama has proposed to eliminate fossil fuel tax breaks, repeal LIFO, and other revenue raisers, to pay for business tax reform, including a reduction in the corporate tax rate.
Affordable Care Act
The Affordable Care Act (ACA) is another potential hurdle to tax reform this year. The House has approved legislation to repeal the ACA and Senate Republicans have offered replacement bills. The real test of how the ACA could impact tax reform will come after June, when the U.S. Supreme Court will decide the fate of the Code Sec. 36B premium assistance tax credit. If the Supreme Court strikes down IRS regulations extending the credit to individuals in both federally-facilitated Marketplaces and state-run Marketplaces, President Obama is expected to call on Congress to come up with a legislative solution. If the White House and Congress can reach an agreement, it would be a good harbinger for tax reform.
If you have any questions about pending tax legislation or tax reform, please contact our office. Article written by CCH.
Friday, February 27th, 2015
Representatives from the Bradenton Office enjoyed pouring wine to over 600 guests at the 27th Annual Hob Nob BBQ, hosted by the Bradenton Area Economic Development Council. Guests and booth workers enjoyed a country themed event full of networking, food, spirits and music. We enjoyed seeing old friends and meeting some new ones! Check out some pictures snapped at last night’s event.
Wednesday, February 18th, 2015
M&J’ers celebrated Fat Tuesday in style at Goodwill Manasota’s Annual Mardi Gras themed Gala. Check out a few pictures from last night’s event at Michael’s on East!
Thursday, February 5th, 2015
Bradenton Tax Partner, Ken Thomas, is featured in this month’s Biz 941 article “A Tax Valentine: How to make your accountant love you, and save you money, too”
The article written by Lori Johnston is a compilation of tips and advice from local CPA’s….and just in time for Valentines Day (or more importantly, tax season). Check out what Ken had to say here!
Wednesday, February 4th, 2015
A BIG congratulations to Sarah Higginbotham and Andrew Fredericks for passing the CPA exam! We are so proud of the hard work and studying they did to accomplish this great feat.
Tuesday, February 3rd, 2015
The tax code imposes a penalty on taxes that are paid after the due date (generally April 15). Taxpayers may wonder whether to save, to pay their taxes on time and avoid the penalty, or delay payment and owe a penalty. While this is a personal decision, and will vary with the taxpayer’s circumstances, a taxpayer may prefer to use their funds for other purposes and delay the tax payment, especially where the penalty is relatively small.
If an individual files a return on pay but fails to pay all of the tax shown on the return, there is a penalty of 0.5 percent of the unpaid tax, for each month or partial month of the delinquency period. There is a cap of 25 percent on the total failure-to-pay tax, with the maximum normally reached after 50 months of taxes due.
If the actual tax liability is less than the amount shown on the return, the penalty is also imposed on the difference between the actual tax liability and the amount paid. Thus, the 0.5 percent penalty is imposed on additional taxes determined to be due on audit for which the IRS has made a demand for payment. This penalty does not begin until the 22nd calendar day after the demand.
The penalty runs from the date prescribed for payment of the tax, until the IRS receives payment. Taxpayers can generally get a six-month extension for filing their return, but this does not extend the payment due date.
The basic failure-to-pay penalty applies if a taxpayer files, either on time or late, a return that shows a tax liability, where the taxpayer fails to pay the tax admittedly owed. Any credits that may be claimed on the return reduce the amount on which the penalty is imposed. These credits against the tax include withholding, estimated taxes, and any other timely payments, such as an amount from the prior year’s refund that the taxpayer asked the IRS to retain and apply against the current year’s tax. A partial payment after the due date of the taxes paid also reduces the amount of the penalty.
The penalty is reduced to 0.25 percent per month for any period in which the taxpayer has an installment agreement with the IRS. The reduction does not take effect until the IRS accepts the agreement. The maximum penalty of 25 percent is not affected, but will not be reached until 100 months.
The IRS also advises that taxpayers may be able to borrow funds from a third party at a lower rate than the penalty, use those funds to pay their taxes on time, and owe less interest to the third party than they would have to the IRS.
Angie’s return and tax are due April 15. She files the return on June 17, paying her tax liability of $5,200 in full. The failure-to-pay penalty applies for three months, at 0.5 percent per month on $5,200. The total penalty is $78 ($26 per month times three months). The number of months is counted beginning from the April 15 due date; thus, the second month of penalties applies for May 15 to June 14, and the third month applies for June 15 to June 17.
Lee’s return and tax are due April 15. Lee files on October 15, showing $7,000 due in taxes. He pays $2,000 with the return, and pays the balance of $5,000 on May 3 of the following year. The failure to pay penalty applies to the $7,000 owed for seven months and to $5,000 for six months. The penalty thus equals $245 ($35 per month on $7,000, times seven) plus $150 ($25 per month on $5,000, times six), or a total of $395.
If you have any questions about these provisions and how they may benefit you, please contact us. Article written by CCH.
Tuesday, February 3rd, 2015
Mauldin & Jenkins will attend the University of Central Florida Spring 2015 Career Expo, tomorrow February 4th. Stop by and say hello to M&J reps Becky Fingerle and Holly Bryant. They will gladly answer any questions about our firm and career opportunities available.
Monday, February 2nd, 2015
The TandemGrowth Financial Advisors, LLC will be hosting a TandemGrowth Conversation, titled “It is not about what you earn, what matters is what you keep,” with our very own Bob Heuel, as the main speaker. The event will be held Thursday, February 19 from 6-8 p.m. at the “Collaboration Cafe.”
For more information click here!
Wednesday, January 21st, 2015
Mauldin & Jenkins will be attending the Alpha Beta chapter of Beta Alpha Psi at The University of Alabama tomorrow, January 22, for the Meet the Firms Accounting Career Fair. Be on the lookout for our enthusiastic M&J representatives, Kelsie Dieter, Bill Curtis and Reid Fawcett! They will be happy to answer any questions you may have about our firm and opportunities with Mauldin & Jenkins.
Monday, January 19th, 2015
In honor Martin Luther King, Jr. and the legacy he has made, we would like to take today to remember this great man and the impact he has made on our society.