IRS audits of individuals reached lowest rate since 2005
The IRS audited 0.96 percent of individual tax returns in fiscal year 2013, declining for the second straight year and reaching the lowest rate since 2005, Richard Rubin of Bloomberg reported on January 8.
Audit rates in all income groups declined in 2013. Among taxpayers with incomes exceeding $1 million, about 10.9 percent were audited, a figure that’s still more than double the rate in 2006, the article stated.
Revenue the agency collected from tax enforcement – such as collections and appeals – increased by 6.3 percent to $53 billion last fiscal year. Revenue generated from audits was $9.83 billion, less than $10 billion for the first time since at least 2003, Rubin reported.
Marijuana is legal. Time to regulate and tax it.
Another January 8 Bloomberg article, this one contributed by longtime Seattle newspaper columnist Joni Balter, focused on the tricky balancing act of transforming recreational marijuana for adults from an illegal to a legal business in Washington state and Colorado.
“In Washington, it now seems that tax revenue won’t be as plentiful as expected a little more than a year ago, when voters approved legalizing recreational marijuana,” she wrote. “Seattle won’t be Amsterdam, with pot smoke wafting out of coffee shops. (No smoking in public, no selling in coffee shops.) Pot stores won’t be omnipresent.”
She added that tax revenues will be more plentiful in Colorado. In the Denver area, tax levies on the final product will be about 30 percent to 35 percent.
But Balter wrote the most acrobatic balancing act is between taxation and price.
“Tax legal marijuana too much, and fewer people will buy it. Tax it too little and public support could wane if minors get a hold of it or if it slips across state lines,” the article stated.
ADP: Private firms add 238,000 jobs in December
The USA Today reported on January 8 that businesses continued a several-month streak of solid payroll gains by adding 238,000 jobs in December, according to payroll processor ADP.
The US Department of Labor’s more closely watched survey of businesses and federal, state, and local governments, due on January 10, is expected to show 195,000 jobs were added last month, the article stated.
Mortgage forgiveness tax break needs to be restored – immediately
Washington Post columnist Michelle Singletary wrote on January 7 that a recently expired tax break for struggling homeowners, the Mortgage Forgiveness Debt Relief Act, which Congress passed in 2007 and extended twice until December 31, 2013, should again be restored.
“If not extended, some people selling their homes could get big tax bills,” the article stated. “As the housing crisis drove people into foreclosure, many borrowers were not aware that forgiven debt, including on mortgages, is considered income.”
FASB opts for ‘known complexity’ in financial instruments
Tammy Whitehouse of Compliance Week wrote on January 7: “Before breaking for the holidays, [the Financial Accounting Standards Board (FASB)] made two key decisions on its project to write new standards for financial instruments that put the board at odds with the direction of the International Accounting Standards Board. FASB decided to abandon an idea heavily criticized in the United States to require a model for classifying debt investments driven by the payment of principal and interest. Instead, FASB will stick with the current guidance that calls for bifurcation, or separation of the elements in hybrid or complex financial instruments.”
Preparers should note changes in 2014 taxonomy, FASB says
In case you missed this around the holidays (I did!), Compliance Week talked to Louis Matherne, chief of taxonomy development for the Financial Accounting Standards Board (FASB), about what changes preparers should be aware of in the 2014 US GAAP Financial Reporting Taxonomy, which the FASB released on December 18, 2013.
[You can read AccountingWEB’s article about the 2014 taxonomy here.]
And the Golden Globe® goes to … Ernst & Young LLP marks more than forty years making sure things add up for the Golden Globe Awards
For the forty-first year, EY will tabulate the results for the Golden Globe Awards, which takes place the evening of January 12. Read more here.
Colorado man gets $100,800 bill from IRS
Happy holidays, Curtis Camus! You owe the IRS $100,800!
The Colorado small business owner got a bill from the agency for that amount on December 26, 2013, with a due date of January 13, 2014, even though he has paid his taxes on time every year, Denver NBC affiliate KUSA-TV reported.
It seems the fee is for not filling out a 5500-EZ business tax form for small business owners who have 401(k)s valued at more than $250,000. Camus should have been filing it with the IRS every year since 2005, but he had no idea until he switched from one investment company to another one. The penalties are $15,000 a year for every year he didn't fill out a 5500-EZ.
Fortunately, Camus has a very good chance of having the penalty waved.
[FYI, a video accompanies the article linked above.]
Your cab driver is looking for a job
Philadelphia NBC affiliate WCAU-TV reported a story on cab driver Abu Bakarr Saccoh, an aspiring accountant who posted a copy of his resume in the passenger cabin of his taxi cab.
“Saccoh, forty-three, came to the United States from Sierra Leone, West Africa in 2001, and has been driving for Freedom Taxi Company for nearly two years,” the article stated. “While he says he enjoys his current job, he also has a strong desire to pursue a career in accounting. His passion for accounting is accompanied by a desire to help other West African natives who may have trouble understanding the tax-filing process.”
The competition for craft beer drinkers takes a bitter turn
If you’re a beer geek like I am, you may find this January 8 TIME article interesting about the uncollaboration within the craft beer industry.