Archive for 'General'

Mar 20

Valued Clients,


As you know, the Federal Government has extended the federal due date for 1040 returns until July 15.


Most of the states and cities have not extended just yet – except Kentucky.


1st and 2nd quarter estimates have NOT been extended. However, The Tax Foundation has just stated:


           “Currently, the IRS has delayed the deadline for 1st quarter payments, which are now due July 15 instead of April 15. However, this means that 2nd quarter payments, regularly due June 15, would be due before quarter 1 payment.”


This is obviously a fast-changing situation, but as of right now . . .


The US Federal return 1040 and the State of Kentucky has extended filing deadline until July 15.


If you live in a state other than Kentucky, or need to file local taxes, there are two options:


-       File for an extension, or

-       Prepare your 1040, state, and local returns and file the state and local returns before April 15.


If you would like to file an extension or discuss this matter, please call our office -513.381.2345


         We suspect other states and possibly cities will follow and extend their deadlines and we will update you.


       Thank You and stay safe!



Aug 14

The Internal Revenue Service has revived a form that hasn’t been used since the 1980s, Form 1099-NEC, Nonemployee Compensation.

Since 1983, the IRS has required businesses to instead file Form 1099-MISC for contract workers and freelancers.
The revival of Form 1099-NEC is part of an effort mandated by Congress in the PATH Act of 2015 to require businesses to file information returns about any non-employee compensation by Jan. 31 of each year. However, there were problems with the IRS’s processing systems because there was still a March 31 due date for any Form 1099-MISC that didn’t contain non-employee compensation. The new form is dated 2020, so it would NOT be used for reporting nonemployee compensation in this year, but in 2020.

However, in March the IRS computers were unable to apply two different due dates to batch Forms 1099-MISC . The results of a single Form 1099 – MISC in a batch submitted after January 31 with an entry in box 7 for non-employee compensation would cause a notice to be issued charging late payment fees on every Form 1099-MISC submitted.

Also, the new Form 1099-NEC is different from the old Form 1099-Misc so pay close attention.

Aug 06



If you own a business, then a home office provides tremendous tax savings.
Whether you operate your business as a proprietorship, LLC, or corporation, the home office deduction can save you thousands in taxes.
And one of the best aspects of this deduction is that it doesn’t cost you a penny more than what you already pay. That’s because it turns personal nondeductible expenses into business deductions that reduce your taxable income.
What qualifies:
To deduct an office in the home, you must pass the regular-use test.
What is regular use for the home-office deduction?
In its audit manual, the IRS states:
Regular use means that you use the exclusive business area on a continuing basis. The occasional or
incidental business use of an area in your home does not meet the regular use test even if that part of your home is used for no other purpose.
How do you prove regular and continuing use?
A log of time spent, and
Documents that corroborate the time spent.
To ensure compliance with the home-office rule that requires regular use, make sure that you use your home office an average of 10 hours a week or more.
Make an average of 10 hours a week your target until either the IRS or the courts give you a better
number. Next, make sure that you build proof that you worked those 10 hours or more.

Part 2 Next . . .

Nov 29

IRSTargetsThousandsOf Small BusinessesForExtraScrutiny – In 3 Parts


Part I – What the IRS is doing.

 The IRS has always been able to match individual tax returns against information statements and propose under reporter adjustments that come in the form of CP2000 notices. ?? But things are changing, and a new era at the IRS is upon us. ?? Now, the IRS is using information statements to find under reporting on business returns.


Thetaxagencyisdoingsome targetingofitsown,fingeringatleast 20,000smallbusinesses. Andthatnumber willgrow. Thescrutinyonthisgroupandinthisway isalittlefrightening.   Smallbusinesspeople acrossAmericaarereceivingIRSnotices. Morewillbecoming.TheIRSgathersdata frommanythirdparties-including credit cardcompanies-toseeif youpickedup everynickelofincome. Remembertorecordandpay

tax on all transactions?


In September, the IRS started its first information return-matching program for business return Forms 1120, 1120S and 1065. This program matched business return incomes to the total amounts reported on all information returns. ??  That would include merchant reporting of credit cards and third party network payments and cash reporting.


This year, business taxpayers also started receiving Form 1099-K, Merchant Card and Third-party Network Payments, reporting amounts received from payment settlement entities (from debit/credit cards and third-party network payers such as PayPal). To avoid taxpayer burden, the IRS stated in a letter to the National Federation of Independent Business on Feb. 9 that it will not require taxpayers to separately report amounts from Forms 1099-K on returns, and has no plans to in the future. ??


Wait a minute; not everyone is convinced. One Congressman, Sam Graves (R­ Mo), Chairman of the House Committee on Small Business, notes that the IRS’s first sentence begins, “Your gross receipts may have been underreported.” Says Congressman Graves that sounds like the IRS is looking for more than just additionalinformation. It soundslikeitcouldmeanmoretaxes,penalties andinterest,Sam Graves wroteinthislettertothe agency.

Mr.Gravessuggeststhattheletterscouldintimidate businesses.Hesaysthatasmallbusinessowner receivingthisnoticemaybealarmedandfeel threatened. TheIRSnoticegoesontosayyour receiptsareofffromanIRSaverage. Within30 days,pleaseprovidedocumentationtoprovewhy yournumbersdon’tfallwithinIRS’sstandard,the IRSasks.



whatthestandardisorwhereitcamefrom. It soundslikeyouarebeingaskedtoprovethat youdidn’tunderreportyourincome. That’s provinganegative,andcouldrequireextensive correspondenceanddocumentation.


AsaresultofForm1099changesandtheever-increasingwebofreporting,theIRSreceives detaileddataaboutcredit-anddebit-card transactions. TheIRSminesthedataandmaythink thatahighpercentageofcardtransactionsmay meanyouarenotreportingall thecashyoureceive.


‘Pleaseexplain,’theIRSmayask. – go to Part II

Sep 05

Tax collectors throughout history haven’t been as popular as athletes or entertainers–or even garbage collectors. But even against the decidedly lukewarm standard applied to most tax collectors, the IRS isn’t looking too good. It isn’t on most people’s favorites, and these days is at a low ebb.


The targeting scandal is three months old and is still going strong. Smack in the middle of it is Lois Lerner, famously invoking the Fifth Amendment. Then there were all the expense issues, the pricey conferences and the team building.



One report said some IRS Brass Spent $100K Each On Travel. And who can forget the kitschy Star Trek, Gilligan’s Island and line dancing videos. Then there were the abused credit cards. Who wouldn’t like a charge card with bills direct to Uncle Sam? And this-  Audit Finds $119 of Unused Nerf Footballs in IRS Cabinet.

A watchdog report found little oversight. Another report from the Treasury Inspector General for Tax Administration said 30% of IRS Seizures of don’t comply with the law. In short, this isn’t your parents’ IRS.


Sure, the President now has a so-called turnaround expert in line to run the , er IRS. But you have to wonder, what’s the behemoth agency’s turning radius?  In the meantime, Congress–or at least Congressional Republicans–are sharpening up their axes to do a little IRS Profiling of their own.


If you aren’t too happy with the IRS right now, you’re not alone. House Republicans aren’t either, so passed an Internal Revenue Code-sized passel of bills by voice vote before their August recess. If nothing else, you have to love the names:


STOP IRS Act, H.R.2565. Actually, this bill has an alternate handle too, the Stop Targeting Our Politics Act. If passed, this law that would expand the existing grounds for firing an IRS employee. New firing offenses would include performing, delaying, or failing to perform (or threatening) any official action–including an audit–for purposes of personal gain or for a political purpose.


The Stop Playing on Citizen’s Cash Act, H.R.2769. This proposed law would impose a moratorium on any IRS conference until the Treasury Inspector General for Tax Administration submits a report to Congress certifying that IRS has implemented all the recommendations set out in its report covering the now notoriously expensive 2010 IRS conference . See “Review of the August 2010 Small Business/Self-Employed Division’s Conference in Anaheim, California.”


Government Spending Accountability Act of 2013, H.R.313. This proposed law would limit any government agency from spending more than $500,000 to support a single conference.


Government Customer Service Improvement Act of 2013, H.R.1660. You have to love this name. This bill would require the Director of the Office of Management and Budget (OMB) to develop government-wide standards for customer service delivery.


The Taxpayer Bill of Rights Act of 2013, H.R.2768. This bill would amend the tax code to say the duty of the IRS Commissioner is to ensure that IRS employees are familiar with and act in compliance with certain taxpayer rights.


Will all these bills actually pass and be signed into law by President Obama? Unlikely. Will any of them pass and be signed by the President? Maybe, but even that is far from clear. Stay tuned.


Thanks Forbes


Aug 12

Many employers outsource their payroll and related tax duties to third-party payers such as payroll service providers and reporting agents. Reputable third-party payers can help employers streamline their business operations by collecting and timely depositing payroll taxes on the employer’s behalf and filing required payroll tax returns with state and federal authorities.
Though most of these businesses provide very good service, there are, unfortunately, some who do not have their clients’ best interests at heart. Over the past few months, a number of these individuals and companies around the country have been prosecuted for stealing funds intended for the payment of payroll taxes. Examples of these successful prosecutions can be found on
Like employers who handle their own payroll duties, employers who outsource this function are still legally responsible for any and all payroll taxes due. This includes any federal income taxes withheld as well as both the employer and employee’s share of social security and Medicare taxes. This is true even if the employer forwards tax amounts to a PSP or RA to make the required deposits or payments. For an overview of how the duties and obligations of agents, reporting agents and payroll service providers differ from one another, see the Third Party Arrangement Chart on
Here are some steps employers can take to protect themselves from unscrupulous third-party payers.


  • Enroll in the Electronic Federal Tax Payment System  and make sure the PSP or RA uses EFTPS to make tax deposits. Available free from the Treasury Department, EFTPS gives employers safe and easy online access to their payment history when deposits are made under their Employer Identification Number, enabling them to monitor whether their third-party payer is properly carrying out their tax deposit responsibilities. It also gives them the option of making any missed deposits themselves, as well as paying other individual and business taxes electronically, either online or by phone. To enroll or for more information, call toll-free 800-555-4477or visit
  • Refrain from substituting the third-party’s address for the employer’s address. Though employers are allowed to and have the option of making or agreeing to such a change, the IRS recommends that employer’s continue to use their own address as the address on record with the tax agency. Doing so ensures that the employer will continue to receive bills, notices and other account-related correspondence from the IRS. It also gives employers a way to monitor the third-party payer and easily spot any improper diversion of funds.
  • Contact the IRS about any bills or notices and do so as soon as possible. This is especially important if it involves a payment that the employer believes was made or should have been made by a third-party payer. Call the number on the bill, write to the IRS office that sent the bill, contact the IRS business tax hotline at 800-829-4933 or visit a local IRS office. See Receiving a Bill from the IRS on for more information.
  • For employers who choose to use a reporting agent, be aware of the special rules that apply to RAs. Among other things, reporting agents are generally required to use EFTPS and file payroll tax returns electronically. They are also required to provide employers with a written statement detailing the employer’s responsibilities including a reminder that the employer, not the reporting agent, is still legally required to timely file returns and pay any tax due. This statement must be provided upon entering into a contract with the employer and at least quarterly after that. See Reporting Agents File on for more information.
  • Become familiar with the tax due dates that apply to employers, and use the Small Business Tax Calendar to keep track of these key dates.

Give us a call we can answer your questions and we also have a payroll service specifically designed for the small business.

Feb 07

Most start-ups fail because these 20 questions were not adequately considered, maybe not even considered at all . . .

  1. What kind of business and I planning
  2. What products/services will my business provide?
  3. Why am I starting a business?
  4. What is my target market?
  5. Who is my competition?
  6. What is unique about my business and my products/services?
  7. How much money do I need for set up and start up?
  8. Will I need to get a loan or outside financing?
  9. Do I have a financial plan and business plan?
  10. How will I price my product compared to my competition?
  11. How will I market my product/business?
  12. How will I set up the legal structure of my business?
  13. How will I manage my business?
  14. Where will I house my business?
  15. How many employees will I need to start up?
  16. Who are my suppliers and what are their costs?
  17. What kind of insurance do I need to invest in?
  18. Do I need tax planning advice and how do I ensure my taxes are being paid correctly.

Get these questions down pat and reconsider!

Then, you’re ready to roll and good luck!

Jul 29

The IRS has reversed its position on granting innocent spouse relief.

The concept of innocent spouse requires that the spouses file a joint return. The problem with a joint return is the joint liability, which means that one or both parties can be held responsible, in part or in full, for any liability.  What happens when the spouses file a joint return showing a liability and one spouse believes that the tax has been “resolved” – and believes this both in error and to his/her disadvantage? What if the spouses are later separated or divorced? What if one spouse is in jail? What if one spouse died?

The effect of joint liability can be harsh, so the IRS Code allows an escape hatch for innocent spouses.

There are three types of innocent spouse provisions in the Code. Two types require the spouse to file the claim within two years of IRS notification. The third type does not contain this provision, but the IRS has construed the provision as containing the wisp of a dim shadow of Congressional intent to include a two-year provision. With that divination, the IRS has been disallowing innocent spouse claims filed later than two years for all three types of innocent spouse claims.

Doesn’t sound like much, but think about an example.  A husband abuses his wife. He certainly is not keeping her informed about tax notices. She knows zip about the taxes other than signing the return at his behest. She finally leaves the fool. She does so however after two years of first IRS contact, not that she would know about it. Previously the IRS would have said that she was out of luck.

Well, a number of people thought this was unconscionable, including the IRS National Taxpayer Advocate, many practitioners and members of Congress. The IRS has finally relented and removed the two-year requirement from “type three” of innocent spouse. For those who follow the tax literature, the change was published in Notice 2001-70.

I have done innocent spouse claims. I am happy with this change.

Aug 04

I read at that Ohio is receiving $152 million in federal money to provide high-risk medical coverage. High-risk covers people who – through pre-existing or other conditions – would be denied regular health coverage.

The program will go through 2014, when other provisions of health-care reform take over.

The states have the option of joining a national program or establishing their own. Governor Strickland chose to build upon an existing Ohio program.

To be eligible, a person must have gone without health insurance for at least six months and have a pre-existing condition (think asthma, diabetes, etc.). They cannot otherwise be eligible for Medicare, the Ohio Medical Assistance Program, the Ohio CHIP or an employer-provided health plan. One must provide documentation of citizenship and legal residency.

The contract went to Medical Mutual of Ohio, based in Cleveland. Premiums will be $98 to $493 for nonsmokers, with a $2,500 deductible. Change that to $108 to $543 for nonsmokers, with a $1,500 deductible.

Ohio is encouraging interested persons to apply as soon as possible at or by calling 1-877-730-1117. Ohio estimates that there is enough money to cover only 5,000 people.

Mar 15

Staring this month the IRS will select several thousand employers at random to receive detailed questionnaires focusing on their 401(k) plans.

This is not an audit; rather the IRS is collecting information. Depending upon the results, the IRS may decide to conduct more audits of 401(k)s.

If you receive one, it is time to speak with your TPA or other plan specialist before returning the questionnaire to the IRS.