Showing 54 posts in Tax.
Seventh Circuit Reverses District Court; Turns Away Constitutional Challenge to Minister's Housing Allowance
The principle that individuals have the right to worship as they see fit has been fundamental in the United States since the country's founding. However, while the government may be prohibited from establishing a religion or interfering with the free exercise thereof, that does not mean that government has no role in religion. Throughout history, organized religions have enjoyed special legal status, including in the Internal Revenue Code (the "Code").
The parsonage allowance, codified in Section 107 of the Code, has two parts. Section 107(1) grants a tax exemption on the rental value of a home directly provided to a minister as part of his or her compensation. Section 107(2) excludes from gross income rental allowances paid to a minister as part of his or her compensation.
In November 2013, the U.S. District Court for the Western District of Wisconsin declared Section 107(2) of the Code unconstitutional because it violates the Establishment Clause of the First Amendment. The decision was appealed to the U.S. Court of Appeals for the Seventh Circuit. Read More ›
Categories: Income Tax, News & Events, Tax
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U.S. Tax Court: Value of Bank Reward Points is Taxable
With holiday travel season upon us, you may be thinking about redeeming some reward points you’ve earned from your bank for a free airline ticket. After a recent U.S. Tax Court ruling, the ticket may not be as free as you think.
In the case of Shankar v. Commissioner, IRS, the U.S. Tax Court sided with the IRS and held that the value of an airline ticket purchased with “Thank You” reward points is taxable as gross income.
Parimal Shankar received 50,000 “Thank You” points from Citibank in 2009. Citibank sent him and the IRS a Form 1009-MISC, which reported the ticket value of $668 as “other income.” Shankar did not report the income. The IRS sought payment of the tax and assessed a $563 deficiency. Shankar disputed the IRS’s position, filed a petition with the U.S. Tax Court, and the case went to trial. Read More ›
Categories: Income Tax, Tax
Michigan Sales and Use Tax Audits
Every year, the Michigan Department of Treasury audits Michigan businesses for compliance with the Sales and Use tax laws. Oftentimes, those audits result in tax assessments that are disputed by the taxpayer. But, how does a taxpayer navigate the audit process and challenge a tax assessment? Read More ›
Categories: Sales Tax, Tax, Use Tax
Failure to Follow Michigan Tax Requirements Creates Personal Liability for Corporate Officers
A commonly-recognized feature of
many business entities is the "shield" that protects officers,
members, managers, and partners from personal liability for the business's
actions. However, that "shield" does not protect the officers of a
company from all liability. Importantly,
if a business fails to pay its taxes, then the key officers of the business can
be held personally liable for the unpaid taxes of the business. Read More ›
Categories: Compliance, Sales Tax, Tax
Kickstarter and Crowdfunding can provide much needed business funds – and a big tax bill
Kickstarter is a crowdfunding platform for creative projects. Project creators set a funding goal and deadline for their project, and if people like the project, they can pledge money to help make it happen. From movies to books, electronic gadgets to fashion, a wide range of projects raise funds (and in many cases don't raise funds) on Kickstarter. One guy even raised over $50,000 to make potato salad.
While Kickstarter has been a great fundraising platform for a wide range of people who may have had no alternative source of financing, an issue that many people overlook is the tax implications from a successful Kickstarter campaign. Read More ›
Categories: Crowdfunding, News & Events, Tax
If You’re Claiming a Charitable Deduction, Make Sure You Follow the Rules
Tax season is over for most individual taxpayers. But it is not too early to start planning your 2014 deductions.
One way to lower your tax liability is to deduct charitable contributions made during 2014. However, to defend your charitable deduction before the IRS, you must retain documentation that supports it. Read More ›
Categories: Tax
Your 501(c)(3) Status Has Been Revoked – What Now?
Many nonprofit corporations are exempt from federal income tax pursuant to Section 501(c)(3) of the Internal Revenue Code. Until relatively recently, many of those tax-exempt nonprofits were not required to file annual Form 990 series returns. That all changed with the Pension Protection Act of 2006. Now, all tax-exempt nonprofits are required to file an annual Form 990 series return. If a tax-exempt organization fails to do so for three consecutive years, then its federal income tax exemption is automatically revoked - - no questions asked.
How Do You Know If Your Tax-Exempt Organization Has Lost Its
501(c)(3) Status?
The IRS maintains a list of organizations that have had their 501(c)(3) status revoked. Read More ›
Categories: Nonprofit, Tax
IRS: Bitcoins Are Property, Not Currency
In guidance issued on Tuesday, March 25, 2014, the IRS warned that virtual currencies, such as Bitcoin, are to be treated as property and not as currency for tax purposes.
"General tax principles that apply to property transactions apply to transactions using virtual currency," the IRS said in the guidance statement. Read More ›
Categories: News & Events, Tax
Corporate Sponsorships for Your 501(c)(3) Organization
Tax-exempt 501(c)(3) charitable organizations can raise money by asking businesses to "sponsor" an event or initiative. These sponsorships can provide much needed revenue to the charity and can help to support an event that allows the charity to raise even more money.
The business that sponsors the event or initiative benefits from the public recognition and from the deduction that it receives for the sponsorship amount, either as a charitable contribution under Internal Revenue Code ("IRC") Section 170 or as an advertising expense under IRC Section 162. Read More ›
Categories: Nonprofit, Tax
Avoid Potential Tax Penalties on Foreign Bank Accounts and Investments
U.S. investors and businesses can be subject to severe tax penalties for failing to properly report their foreign bank accounts, investments and subsidiaries to the Internal Revenue Service (IRS). The potential penalties can be more than $10,000 per year, and can be assessed in addition to taxes and interest! Read More ›
Categories: Tax
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