Weekly Digest – September 29th 2023
Our office is still going crazy as our “final” tax deadline of October 15th approaches. We have given up on sending out repeated emails for “that last missing piece of information” which can help our clients minimize their tax liability and are just working with the information we have “in house”. I have checked with other tax professionals who are experiencing the same behavior from some of their clients. I am as bad as some of them, as I too wait until the last minute to file, but there always seems to be some better way to spend my time and I always make sure to file a valid extension which more than covers my tax liability.
It seems like sometimes the sliver lining is the cloud cover which lights the sky at sunrise with amazing colors…
Healthy smoothie anyone, of course I needed some greens after breaking the fast with bagels, lox and cream cheese…
Our solar pannel installion was finsihed on Wednesday, and the test shows that we will be producing and using our own “juice” in two weeks (once all inspections and approvals go through)
I am hoping the rain lets up and you can enjoy your weekend, for those of you who celebrate Sukkot enjoy the holiday and time in your succahs.
Weekly Take Away
#ILOVETHEHOLIDAYS continues… Monday night we hosted the Yom Kippur break-fast with “only family from the block”. In the past we have hosted as many as 40 friends and family. It’s quite a bit of work although everyone helps and it’s always worth the effort. We did miss seeing our other friends and family but these small gatherings allow us all to sit at one table and hold one conversation, it’s been great. Tonight we are invited next door for Shabbot dinner as the holiday of Succoth begins. Hopefully the rain and thunder will end and we can eat in the succah with “only family from the block”.
TAX ISSUES/TAX PLANNING
IRS New Unit to Target Pass-Through Entities Used by High-Income Taxpayers
I am not sure of the statistics, but I can imagine most small business choose a pass through entity such as sole proprietorship, limited liability company (LLC/PLLC), partnership or S-Corporation and most start out as sole proprietorships before incorporating. In some cases pass-through entities are used by the wealthy to ‘avoid paying the taxes they owe,’ according to the IRS commissioner. The IRS announced establishing a new division targeting “pass-through” entities, which the agency claims will hold America’s wealthiest tax filers “accountable.”
The new pass-through unit within the Larg Business and International (LB&I) division will include many of the 3,700 agents the IRS is planning to hire in an effort to ramp up tax compliance efforts against high-income earners, complex partnerships, large corporations, and promoters. “We are honing-in on areas where we believe noncompliance among our wealthiest filers has proliferated over the last decade of IRS budget cuts, and pass-throughs are high on our list of concerns,” IRS Commissioner Danny Werfel said in a statement on Sept. 20. “This new unit will leverage Inflation Reduction Act funding to disrupt efforts by certain large partnerships to use pass-throughs to intentionally shield income to avoid paying the taxes they owe. These efforts are consistent with our broader commitment to use Inflation Reduction Act dollars to end the era of historically low error rates for wealthy and large entities, while making sure middle- and low-income filers continue to see no change in audit rates for years to come.”
The announcement of the new pass-through unit comes nearly two weeks after the IRS said it would open examinations of 75 of the largest partnerships in the U.S. that on average have over $10 billion in assets by the end of September. The agency said it will be using improved technology, including artificial intelligence, to better detect tax cheating by large partnerships and wealthy earners, identify emerging compliance threats, and improve audit case selection tools.
The Automatic 6-Month Extension Deadline is Approaching
If you were unable to file your tax return by the April 18th deadlines, you should have filed your 2022 extension with any balance due and possibly the first estimate for 2023. We are coming up to the filing deadline of October 15th, which if not met may cause additional penalties and interest.
Still Time to Make Annual SEP/IRA Plan Contribution
The upcoming individual tax return filing deadline of October 15th is also a deadline for funding your company’s SEP/IRA for sole proprietorships. This is a great tax minimization planning technique, take the funds from the tax liability pocket and put them into the pension plan pocket where they can grow tax free until retirement or required distribution dates.
Tax Planning Starts at Home With Solar Pannels and Other Home Improvements
If you make energy improvements to your home, tax credits are available for a portion of your qualifying expenses. You can claim either the Energy Efficient Home Improvement Credit or the Residential Clean Energy Property Credit for the year when you make qualifying improvements. Improvements to your primary residence offer opportunities to claim a credit. If you own a second home and use it as a residence, you may also be able to claim these credits. You cannot take credits for property you rent to others. Feel free to contact us to help you determine if the benefits offered by installing solar panels, new windows and exterior doors, insulating your attic, etc will be good for your tax returns as well as the environment.
Government Shutdown, UAW Strike, and Oil Prices Will Test a Resilient U.S. Economy
It seems like a prefect storm for the economy. According to this article in U.S.News: “The economy faces myriad challenges entering the last quarter of the year. There is the ongoing strike by United Auto Workers members against the major car manufacturers. There is the growing likelihood of a government shutdown as Congress inches closer to the midnight Friday deadline without a budget that can pass muster with both parties in both chambers. There is the rising price of oil with the international benchmark Brent crude now sitting above $93 a barrel. And throw in also the resumption of student loan payments early next month as another drag on economic growth.
Put it all together and there is little doubt the economy faces some of the stiffest headwinds of the year, even as it has defied predictions of a recession many times during the past nine months. Aiding the economy’s escape from a downturn has been an unusual set of circumstances that include falling inflation, rising wages and some leftover stimulus from the COVID pandemic.”
FTC Action Leads U.S. Dept. of Education to Forgive Nearly $37 Million in Student Loans for Those Deceived by the University of Phoenix
Last week the Federal Trade Commission announced that its enforcement action against the University of Phoenix continues to help students deceived by the for-profit university, as the U.S. Department of Education will forgive nearly $37 million in federal loans for borrower defense for more than 1,200 students affected by the school’s deceptive practices, based in part on the FTC’s 2019 case.
U.S. Business Activity Nears Stand-Still in September
According to articles by Reuters: “U.S. business activity showed little change in September, with the vast services sector essentially idling at the slowest pace since February, and overall new order activity slipping to the lowest level this year as per a survey published Friday September 22nd.
The U.S. economy so far this year has defied projections for sliding into a recession that most economists had expected would be triggered by the Federal Reserve’s aggressive interest rate increases aimed at quelling inflation. Job growth and consumer spending have all held up, and the pace of inflation has slowed markedly, leading Fed officials on Wednesday to upgrade their economic forecasts to a degree that suggests many of them now believe a recession may be averted altogether.’
- IRS resources for stimulus payments:
- IRS information about the Advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Our prior blog posts, videos and prior weekly newsletters
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are here for you.
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started
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