Implications of State Transactions & Nexus

00000000-1-A-S-Dion5One of the main goals for a taxpayer is to increase his revenue. Two of the main areas, for a business to achieve this, are to expand its customer base into various states and to provide customer service. This could mean that the taxpayer might perform various kinds of transactions to expand the business’ influence in a state.

Depending on the kind of transactions, and the situation that the business finds itself in, nexus might be created. Nexus means that a taxpayer has filing obligations with a state whether for purposes of paying sales tax, filing state income tax returns, filing tangible personal property tax returns & other similar filing requirements.

There are many types of situations where a business could find itself having nexus with a state and most of it is concerning whether the taxpayer has economic substance with that state. Economic substance means that a business is essentially using the resources and infrastructure, of a state, to expand their business, for example using the state’s roads, properties, etc.

Certain transactions, that could create economic substance, are holding inventory in a warehouse, hiring employees to work, hiring independent contractors to work in a state, sending an employee to repair items in a state and many others. We always urge taxpayers to consider nexus implications for any new type of transaction which they are not familiar with and to test, on an ongoing basis, whether they have a nexus within the state.

Our firm is here to help you in making these kinds of considerations and would gladly consult with you on possible taxable effects and filing requirements that you might incur from having a nexus within a state.

Like-Kind Exchanges: Defer Part (Or All) Of Your Gains From Investments Sales

Have you been looking to sell your investments? Are you aware that you could defer part, or all, of the gain by exchanging your investment with a similar one?

Like-Kind Exchanges

Like-Kind Exchange

The Internal Revenue Service (IRS) provides a benefit, known as Section 1031 – Like-kind Exchanges, for taxpayers that reinvest proceeds from selling certain kinds of investment property:

By exchanging your real property or personal property -used in either a trade or business- with a similar asset, you will be able to defer the gain from the exchange.

It is important to understand that not all property qualifies for like-kind exchanges and that, depending on the type of transaction, you might have to pay taxes, as some gains will not be deferred. There are also very stringent deadlines that the IRS imposes in order to qualify for this benefit.

Usually, due to the strict time frame and the complexity of the transaction, the IRS requires the taxpayers to select a qualified intermediary acting on their behalf throughout the process. The reason is to avoid premature cash exchanges and to complete all of the necessary documentation to avoid the transaction from being disqualified.

Please contact us for further details or advice on this matter or other tax issues you might have. It is important to realize that every transaction is unique and might expose the taxpayer to varying tax consequences.

Photo credit: andrew c mace via Visualhunt / CC BY-NC-SA

Tax Scams: IRS “Dirty Dozen” List for the 2016 Filing Season

WASHINGTON — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, headlining the annual “Dirty Dozen” list of tax scams for the 2016 filing season, the Internal Revenue Service announced today.

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Tax Scams

The IRS has seen a surge of these phone scams as scam artists threaten police arrest, deportation, license revocation and other things. The IRS reminds taxpayers to guard against all sorts of con games that arise during any filing season.

“Taxpayers across the nation face a deluge of these aggressive phone scams. Don’t be fooled by callers pretending to be from the IRS in an attempt to steal your money,” said IRS Commissioner John Koskinen. “We continue to say if you are surprised to be hearing from us, then you’re not hearing from us.”

“There are many variations. The caller may threaten you with arrest or court action to trick you into making a payment,” Koskinen added. “Some schemes may say you’re entitled to a huge refund. These all add up to trouble. Some simple tips can help protect you.”

The Dirty Dozen is compiled annually by the IRS and lists a variety of common scams taxpayers may encounter any time during the year. Many of these con games peak during filing season as people prepare their tax returns or hire someone to do so.

This January, the Treasury Inspector General for Tax Administration (TIGTA) announced they have received reports of roughly 896,000 contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam.

“The IRS continues working to warn taxpayers about phone scams and other schemes,” Koskinen said. “We especially want to thank the law-enforcement community, tax professionals, consumer advocates, the states, other government agencies and particularly the Treasury Inspector General for Tax Administration for helping us in this battle against these persistent phone scams.”

Protect Yourself from Tax Scams:

Scammers make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email.

Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the license of their victim if they don’t get the money.

Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.

Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam.

The IRS will never:

Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
Require you to use a specific payment method for your taxes, such as a prepaid debit card.
Ask for credit or debit card numbers over the phone.
Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

If you don’t owe taxes, or have no reason to think that you do:

Do not give out any information. Hang up immediately.
Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe tax:

Call the IRS at 800-829-1040. IRS workers can help you.
Stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

IRS YouTube Video:

Tax Scams – English | Spanish | ASL
Security Summit Identity Theft Tips Overview – English
Be Careful When Using Wi-Fi – English
Update Your Password Regularly – English