New 2015 Tax Law Changes Tax and FBAR Filing Deadlines & Other Noteworthy Compliance Provisions: The Good, The Bad & The Ugly

2015 Tax Law Changes

On Friday, July 31, 2015, President Barack Obama signed HR 3236, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” (the “Act”). Not sure how this name relates to taxes but in any event the following tax law changes and provisions became law under this Act:

  • Changes to the due dates for various returns. The Act sets new due dates for partnership returns, C corporation returns.
  • Foreign Bank Account Reporting:  New due dates for the important and often overlooked foreign bank account reporting (FBAR) forms, known as FinCEN Form 114, Report of Foreign Bank and Financial Accounts have been implemented.
  • Changing the six year statute of limitations to apply to understatements of income that resulted from taxpayers overstating tax basis when calculating sales.  This change overturns the Home Concrete case where the Supreme Court ruled that understatements of income as a result of basis miscalculations would not trigger the extended six-year statute of limitations applicable to understatements of income.
  • Requiring consistent basis reporting for estates and estate beneficiaries.
  • Requiring additional information to be included in mortgage information statements.
  • Other Information Returns:  The new act imposes new filing requirements for several other IRS information returns.

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Small Businesses Can Get IRS Penalty Relief for Unfiled Retirement Plan Returns

IRS-Form-5500-EZ-Remedial Filing

Minimize Penalties For Failure To File Returns For Retirement Plans

Have you failed to file your retirement plan reporting form for your retirement plan?

If you have failed to do so, the Internal Revenue Service on July 14, 2015 provides eligible small businesses a low-cost penalty relief program enabling them to quickly come back into compliance with IRS filing rules.

The program is designed to help small businesses that may have been unaware of the reporting requirements that apply to their retirement plans. In most cases, retirement plan sponsors and administrators need to know that  a return must be filed each year for the plan by the end of the seventh month following the close of the plan year. For plans that operate on a calendar-year basis, as most do, this means the 2014 return is due on July 31, 2015.

Small businesses that fail to file required annual retirement plan returns, usually Form 5500-EZ, can face stiff penalties – up to $15,000 per return! However, by filing late returns under this program, eligible filers can avoid these penalties by paying only $500 for each return submitted, up to a maximum of $1,500 per plan. For that reason, program applicants are encouraged to include multiple late returns in a single submission.

The program is generally open to small businesses with plans covering a one hundred percent (100%) owner or the partners in a business partnership, and the owner’s or partner’s spouse (but no other participants).

Key Point:  However, those who have already been assessed a penalty for late Continue reading

Philadelphia Use & Occupancy Tax Rate Change Effective July 1, 2015

Philadelphia U&O Tax Increase

Lit Brothers: Back in the Day

Philadelphia has just increased its Use and Occupancy Tax as of July 1, 2015. The new Use & Occupancy Tax rate will be 1.21%. This is an increase from the prior rate of 1.13%.

This new rate will be effective with the July 2015 Use & Occupancy tax Return that is due July 27, 2015.  Remember that as of January 2015, all U&O tax returns must be filed and paid on-line through the Philadelphia Department of Revenue website.  So when filing in July, 2015 be aware of this increased tax rate and resulting tax increase. Continue reading

The City of Philadelphia Department of Revenue Announces Wage Tax Reduction for July 1, 2015.


Philadelphia business owners and those that withhold taxes on employees that live in Philadelphia should take notice that the City of Philadelphia has reduced the City Wage Tax rate effective July 1, 2015.

• The new Wage Tax rate for residents of Philadelphia is 3.9102% (.039102).

• The new Wage Tax rate for non-residents of Philadelphia who are subject to the Philadelphia City Wage Tax is 3.4828% (.034828).

What does this mean to you as an employer of Philadelphia employees?

Any paycheck that you issue with a pay date after June 30, 2015 must have Philadelphia City Wage Tax withheld at the new rate that applies to your employee.

If you have any questions about the new Philadelphia City Wage Tax, please call us at 215-735-2336. We will gladly assist you.

Philadelphia Estate and Tax Blog Named The Best Tax Blog in America For 2015


My very own Philadelphia Estate and Tax Attorney Blog has just won as the Best Tax Blog In America for 2015!

I am most appreciative of all of you who took the time to vote for my blog.  You can see the final voting results by going to:

Thanks so much to everyone who voted!

Philadelphia Businesses Must Now Provide A New Tax Notice To Employees and Non-Payroll Workers

Philadelphia Business Employer Notice Requirements 2015 Philadelphia notice Requirements for Businesses for 2015

If you are a business that has employees or independent contractors who live in Philadelphia, the City of Philadelphia is now imposing new notice requirements.

Beginning January 1, 2015, Title 19, Chapter 19-4000, of the Philadelphia Code, entitled “Income Inequality Initiative – Earned Income Tax Credit,” requires all employers to provide notice of the federal Earned Income Tax Credit (“EITC”) program to all Philadelphia resident employees and non-payroll workers at the same time as their W-2, 1099, or comparable forms are provided.

This new law applies to not only companies in Philadelphia but to those entities not located in Philadelphia that employ or pay residents of the City of Philadelphia.

About the Earned Income Tax Credit:

The Earned Income Tax Credit (“EITC”) is a refundable credit available to low to moderate income individuals and families. Over 40,000 Philadelphia residents are not claiming EITC, which has an average benefit of $2,400 per return. The goal of this law change is to help help more of its citizens take advantage of this tax break and ultimately infusing an extra $100 million into the Philadelphia economy.

The City of Philadelphia Earned Income Tax Credit Notice Requirements:

Under Title 19, Chapter 19-4000 of the Philadelphia Code, an employer must do the following:

(A) The employer must give the employee or non-payroll worker the “2014 Earned Income Tax Credit (‘EITC’) Notice,” at the same time it provides a W-2, 1099, or comparable form


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2014 Year-End Tax Planning Guide For Businesses: Discover 9 Proven Tax Planning Strategies

Year-End Tax Planning For Business

Business Year-End Tax Planning

The arrival of year-end presents special opportunities for most small businesses to take steps in lowering their tax liability. The starting point is to run projections to determine the income and tax bracket for this year and what it may be next year.  Once this is known, decisions can be made as to whether any of the following planning tools should be employed to cut taxes before the tax year closes.

Last second tax law changes also must be considered.  It is also important to know that on December 19, 2014, the President passed the Tax Increase Prevention Act that extended many expired tax provisions some of which are discussed in more detail below.  Note that these tax breaks are only available through the end of  2014.  If any of these tax breaks are available to you, it would be prudent to take advantage of them before they expire.

Also keep in mind ordinary income tax rates for individuals can be as high as 35% to 39.6%  so members of flow through entities such as partnerships, limited liability companies (LLCs) and S Corporations need to recognize this and other tax changes and plan accordingly.

The following presents some year-end tax strategies that may prove helpful to  businesses of all shapes and sizes:

1. Accelerating or Deferring Income and Deductions as Part of a Year-end Tax Strategy

A good part of year-end tax planning involves techniques to accelerate or postpone income or deductions, as your tax situation dictates. The idea is to keep income even from year to year. Having spikes in taxable income in any one tax year puts you in a higher average tax bracket than you would be in if you had evened out the amount of taxable income between current and later year(s).  (Historical note:  For those of you old enough to remember, there was an income averaging rule built into the tax code that actually corrected for the inequity that can result in big shifts in income from year to year.  That provision has long been abolished.)

So every year, businesses can take advantage of the traditional planning technique that involves alternatively deferring income or accelerating deductions. For example, business taxpayers such as pass-through entities (limited liability companies, partnerships, S corporations, sole proprietorship) should consider accelerating business income into the current year and deferring deductions until 2015 (and perhaps beyond) if they expect income to rise next year. Continue reading