Happy Thanksgiving

Happy Thanksgiving From Where It All Started

UPDATE: The Affordable Care Act and Your Company

Join the Small Business Association (SBA) in person or via webinar to learn the basics of the Affordable Care Act and what it means for your business and employees in Massachusetts.

Presented by:  David Kerrigan, Director of Business Development & Audrey Morse Gasteier, Deputy Director of Policy and Research and Director of Employer Policy at the Massachusetts Health Connector.

Program Objective: Effective January 1, 2014, the Affordable Care Act (ACA) will usher in new changes and opportunities for small businesses. This program will provide an overview of some of the key changes and discuss how national health reform and Massachusetts’ health reform policies are being reconciled for employers.

Date and time:  Monday, December 2, 2013, from 10:00 a.m. – 11:00 a.m.

Where:  10 Causeway St., Room 265, Tip O’Neill Federal Building, Boston, MA 02222

                                                                   OR

Call in:  1-888-858-2144 - Access Code: 3308406#

Link: http://www.connectmeeting.att.com

To register or for questions, please contact:        

          Malise Sundstrom, Phone: 617-565-8417, E-mail: malise.sundstrom@sba.gov

IRS Payment Alternatives Webinar - Dec 11th

Owe federal taxes?   Pay now?   Pay later?   Problems paying?

Find out what options are available during this FREE one-hour webinar…

Topic: Payment Alternatives When You Owe the IRS

Date:  Wednesday, December 11, 2013

Time:  11:00 a.m. (Pacific); Noon (Mountain); 1:00 p.m. (Central); 2:00 p.m. (Eastern)

What's Covered:

• Installment Payment Agreements
• Types of agreements
• Who qualifies
• How to apply
• Offer in Compromise
• What to do before you apply
• Who qualifies
• How to apply

CPE:  Earn one CE Credit – Category: Federal Tax

Information & Registration:

Click on the following link to register:
http://www.visualwebcaster.com/event.asp?id=96566

IRS Webinar Support Team
Small Business/Self-Employed

RI Renewal for Historic Tax Credit Regulation

The Rhode Island Division of Taxation yesterday renewed for 90 days its emergency regulation involving historic tax credits.

The agency originally filed the emergency regulation this summer so that it would take effect August 1, 2013, and remain in force for 120 days, until November 29, 2013. The Division of Taxation today took action to renew it, with no changes, so that it will remain in effect from November 29, 2013, through February 27, 2014.

This will give the agency ample time to develop a formal (non-emergency) regulation on the subject. The agency tentatively plans to propose such a regulation sometime in December 2013, and schedule a public hearing on it sometime in January 2014; dates and other details will be announced. The goal is to make the regulation final by the end of February.

Legislation approved by the General Assembly and signed into law by Governor Lincoln D. Chafee in July 2013 essentially reopened the state’s historic tax credit program, with certain limits, to encourage redevelopment and reuse of historic buildings. The Division of Taxation’s emergency regulation is intended to provide guidance to developers and other stakeholders about the credit program.

Rhode Island Division of Taxation -- inflation adjustments for 2014

The RI Division of Taxation has issued inflation-adjusted standard deduction, personal exemption, and other amounts for tax year 2014.

Please use the following link to view details:

http://go.usa.gov/W9KH

Weigh in on DOR's Guidance by Taking the Survey

The MA DOR has heard from many of you, but if you have not responded, please do.

DOR TAX GUIDANCE SURVEY

Commissioner Pitter launched DOR 360, her signature initiative to open communication lines between DOR and its stakeholders, almost one year ago and a key component of the initiative is monitoring the quality of DOR’s customer service.   The Commissioner wants to know how well the department is serving the DOR community.  To answer that question, DOR launched a series of surveys this year.  The results are being carefully reviewed and changes are being made.

Guidance is an essential resource for taxpayers and practitioners and it is important for us to hear how you utilize DOR’s guidance.  Accordingly, we are requesting that you complete this DOR Tax Guidance Survey. We would very much appreciate your input.

Tell us about your experience with DOR’s guidance

By taking this survey, you will provide DOR with important feedback on what you believe works, what needs improvement, and perhaps what should be eliminated.

How to take the survey

Survey Link: https://www.research.net/s/DORGuidance

Or, scan the QR code and use your smartphone

Time

The survey will take approximately three minutes to complete.

Anonymous

This survey is completely anonymous, unless you choose to provide us with contact information for follow up – and that contact information will be shared with no one outside DOR.  We ask for contact information because we learn so much from the survey responses and sometimes that generates new questions we had not considered.  It is helpful to have the opportunity for more discussion on a particular issue.

Results will be published

The overall results of the survey will be published on the DOR website.
Thank you for your participation.  We look forward to hearing from you, and all of our stakeholders, and to improving our guidance for the benefit of all.

To contact the DOR: dor360@dor.state.ma.us

Repair v Capitalization Regulations Safe Harbor Options Released

The Repair v Capitalization regulations released back in 2011 have been revised and re-released.  The re-
released regulations make up 111 pages as a pdf file.  They discuss many different areas.  This email text discusses the portion of these regulations that provide a safe harbor dollar amount for deducting purchases of equipment.

Previous to these regulations there was a $500 safe harbor per item amount that could be deducted for purchases of “smallwares” by restaurants, but there was not a safe harbor amount for any other business.  We know many tax professionals used $500 or another amount when preparing financial statements or income tax returns.  The 2011 regulations proposed a $100 amount.  These new September 2013 regulations increase this amount and give us additional options if certain conditions are met.

Here are the safe harbor amounts available and their respective conditions:

** $200 – The definition of “materials and supplies” includes property that has an acquisition or production cost of $200 or less (increased from $100 or less in the 2011 regulations).  This $200 is per item or invoice.

Example 6.  Unit of property that costs $200 or less.  F operates a business that rents out a variety of small individual items to customers (rental items).  F maintains a supply of rental items on hand.  In Year 1, F purchases a large quantity of rental items to use in its rental business.  Assume that each rental item is a unit of property under §1.263(a)-3(e) and costs $200 or less.  In Year 2, F begins using all the rental items purchased in Year 1 by providing them to customers of its rental business.  F does not sell or exchange these items on established retail markets at any time after the items are used in the rental business.  The amounts that F paid for the rental items in Year 1 are deductible in Year 2, the taxable year in which the rental items are first used in F's business.

PTIN Revoked Under Circular 230; CPA Hung Out To Dry

David O. Christensen, a CPA licensed in Oregon and Washington, sued a trust being administered by his
brother, on behalf of his minor daughter for whom he was guardian ad litem (guardian of his daughter’s property).  The daughter was a beneficiary of the trust and Christensen believed (correctly as it turned out) that the trust assets were being improperly administered.  He obtained a $90,000 settlement on behalf of his daughter.

The funds (less a charge by him of $15,000 for reimbursement of the costs associated with obtaining the settlement) were deposited into Christensen’s personal investment account (as opposed to an account for the benefit of his minor daughter) and he proceeded to both lose money in trading activity and disburse money to pay other people to perform accounting and recordkeeping (note that he was a CPA).

Within eighteen months, less than $24,000 of the original $90,000 was still in the account.  Christensen was sued and eventually accepted a guilty plea to one count of first degree theft.  Christensen’s CPA licenses were subsequently revoked in both states as a result of the conviction.

Now comes the IRS.  The return preparer office of the IRS revoked Christensen’s PTIN for disreputable conduct by claiming that all PTIN holders are subject to Circular 230 in its entirety. Christensen appeared before an Administrative Law Judge and argued that his theft conviction was a family related matter having nothing to do with his income tax preparation, and that he should be allowed to retain his PTIN.  The judge, however, ruled that he displayed a lack of integrity and found for the IRS.  Christensen was prohibited from any practice before the IRS for a period of five years.

It would appear to your Editor that the IRS has a very potent weapon in pulling someone’s PTIN – you are out of the income tax preparation business.  It isn’t even necessary to suspend or revoke your right to practice (i.e. as a result of state action against one’s CPA license).  Losing your PTIN will accomplish the same thing.

Upcoming IRS e-File Maintenance Period

In the new era of modernized e-file, IRS will accept most electronic returns for 2 years after the initial filing season for that tax year.  So, a 2012 return can be filed electronically in 2013, 2014, and 2015.

However, IRS does have a down time for maintenance.

For individual returns, that down time begins 11/23/2013 at 10:00 am ET and ends when the IRS opens up for business in late January or early February of 2014.  So, NO individual returns can be electronically filed between 11/23/2013 at 10:00 and opening day in filing year 2014.

For business returns, that down time begins 12/26/2013 at 11:59 am ET (subject to change) and ends when the IRS opens up for business in early January of 2014.  So, NO business returns can be electronically filed between 12/26/2013 at 11:59 and opening day in filing year 2014.

During the IRS maintenance period, your software company may or may NOT accept returns until they open up our transmissions sometime in January.  After that time, you will be able to transmit 2011, 2012, and 2013 returns.  But, remember none of those can be forwarded to IRS until the official IRS start date, which has yet to be determined.

Annual State Update Seminar - Save the Date

Massachusetts / Rhode Island NATP Annual State Update & Educational Seminar January 9th, 2014 @ Sturbridge Host in Sturbridge MA

Speakers will include:

Connecticut Department of Revenue
Massachusetts Department of Revenue
Rhode Island Division of Taxation
New York State Tax Update
Mini Federal Update

Stay tuned for more details and complete registration details!

2014 PTIN Renewal Period Underway for Tax Professionals

WASHINGTON — The Internal Revenue Service today reminded the nation’s almost 690,000 federal tax return preparers that they must renew their Preparer Tax Identification Numbers (PTINs) for 2014. All current PTINs will expire on Dec. 31, 2013.

Anyone who, for compensation, prepares or helps prepare any federal return or claim for refund must have a valid PTIN from the IRS. The PTIN must be used as the identifying number on returns prepared.

“We ask that you renew your PTIN as soon as possible to avoid a last-minute rush. It’s easy to let this slip as the holiday season approaches,” said Carol A. Campbell, Director, IRS Return Preparer Office.

The PTIN system is ready to accept applications for 2014.

For those who already have a 2013 PTIN, the renewal process can be completed online and only takes a few moments. The renewal fee is $63. If you can’t remember your user ID and password, there are online tools to assist you. Preparers can get started at www.irs.gov/ptin.

If you are registering for the first time, the PTIN application fee is $64.25 and the process may also be completed online.

Form W-12, IRS Paid Preparer Tax Identification Number Application and Renewal, is available for paper applications and renewals, but takes four to six weeks to process. Failure to have and use a valid PTIN may result in penalties. All enrolled agents, regardless of whether they prepare returns, must have a PTIN in order to maintain their status.

There have been a number of enhancements to the online PTIN system since last year. They include:

• The fully functional "Manage My Account" tool allowing preparers to self-correct almost any field at any time (including professional credentials). Previously, most changes had to be made during renewal. A phone call was required for users to make changes during the rest of the year. However, for security reasons, name changes still require written documentation.
• Preparers can now view completed continuing education programs reported by IRS-approved providers beginning with 2013 courses. Providers report completed CE programs to the IRS based on your PTIN number. Enrolled agents must have a minimum of 16 CE hours annually and a total of 72 hours every  three years. Others can also view voluntary programs completed. If something is missing, contact your provider directly as we only display what providers send to us.
• Planning to take a year off for any reason? A new function allows certain preparers to inactivate their PTINs voluntarily and then reactivate the same number when they return to work. This is only for those preparers who plan to take a full year off. If you are paid to prepare tax returns during any part of a year, you must have a valid PTIN. Note: Enrolled agents must maintain a valid PTIN each year in order to maintain their EA credential and therefore are not eligible to inactivate their PTIN.

For more information about requirements for federal tax professionals and access to the online PTIN system, go to www.irs.gov/for-Tax-Pros.

Happy Veterans Day

Rhode Island Estate Tax Threshold Set for 2014

The Rhode Island Division of Taxation today posted an Advisory about the estate tax threshold for 2014. The Rhode Island estate tax threshold will be $921,655 for decedents dying on or after January 1, 2014, compared with $910,725 for decedents dying in 2013, an increase of 1.2 percent

For additional details, please use the following link from the RI DOT - http://go.usa.gov/WbbJ

2014 Pension Plan Limitations Announced

The 2014 pension plan limitations have been announced.  Below are some of the more common amounts.

The defined benefit plan limitation increases to $210,000 (up from $205,000 for 2013).  The defined contribution plan maximum increases to $52,000 (up from $51,000 for 2013).

The annual compensation limit for most employer contributions increases to $260,000 (up from $255,000 for 2013).

A year of service for SEP coverage remains at $550.

The maximum elective deferral for §401(k), §403(b), §457, and SARSEPs remains the same at $17,500 with the catch-up amount staying at $5,500.

The maximum elective deferral to SIMPLE plans remains at $12,000 with a catch-up of $2,500.

The IRS Notice also has the other pension related indexed amounts such as key employee, top heavy, and “control employee” limits.

A copy of this Notice can be found at www.irs.gov/pub/ by clicking on irs-news and then clicking on IR-13-85

Rhode Island Division of Taxation Seminar For Tax Preparers

There's only one day left to register for the Division of Taxation's seminar for tax preparers.

At the seminar, the Division of Taxation will offer an update for filing season. There will also be a personal income tax "boot camp," which will focus on the basics of some items that are of particular interest to preparers, such as the Form RI-1040H (property tax relief).

The free seminar will be held at the Community College of Rhode Island in Newport from 9 a.m. to 11:30 a.m. on November 14, 2013, but pre-registration is required -- and the deadline to register is 4 p.m. on Friday, November 8, 2013. (A second session, at CCRI in Warwick on December 4, is already sold out.) For more information, please use the following link:

http://www.tax.ri.gov/Tax%20Website/TAX/onlineservices/Seminar%20flier%20revised%2010-15-13%20at%204pm.pdf

AFRs and 7520 Rates for November 2013

AFRs - - When a taxpayer makes a loan or sells something on installment, a minimum interest rate normally has to be charged.  The minimum rate depends on the month of the loan or sale.  The IRS releases the Applicable Federal Rates (AFRs) each month.  They are broken down into short-term (3 years or less), mid-term (more than 3 years, but not more than 9 years), and long-term (more than 9 years).  They are further broken down into Annual, Semi-Annual, Quarterly, or Monthly compounding periods.

The November 2013 applicable federal rates (AFRs) are (annual, semi-annual, quarterly, monthly):
Short-term---0.27---0.27---0.27---0.27
Mid-term---1.73---1.72---1.72—1.71
Long-term---3.37---3.34---3.33---3.32

IRC 7520 Rates – These rates are normally used when determining life estate & remainder interests when property has been gifted with the giver retaining a life estate.  The rate for November is 2.0%.

Revenue Ruling 2013-22

MASS DOR TAX GUIDANCE SURVEY

Commissioner Pitter launched DOR 360, her signature initiative to open communication lines between DOR and its stakeholders, almost one year ago and a key component of the initiative is monitoring the quality of DOR's customer service.   The Commissioner wants to know how well the department is serving the DOR community.  To answer that question, DOR launched a series of surveys this year.  The results are being carefully reviewed and changes are being made.

Guidance is an essential resource for taxpayers and practitioners and it is important for us to hear how you utilize DOR?s guidance.  Accordingly, we are requesting that you complete this DOR Tax Guidance Survey. We would very much appreciate your input.

Please tell us about your experience with DOR's guidance

By taking this survey, you will provide DOR with important feedback on what you believe works, what needs improvement, and perhaps what should be eliminated.

Time

The survey will take approximately three minutes to complete.

Anonymous

This survey is completely anonymous, unless you choose to provide us with contact information for follow up and that contact information will be shared with no one outside DOR.  We ask for contact information because we learn so much from the survey responses and sometimes that generates new questions we had not considered.  It is helpful to have the opportunity for more discussion on a particular issue.

Results will be published

The overall results of the survey will be published on the DOR website.

Survey Link: https://www.research.net/s/DORGuidance

2014 Income Tax Rates and Miscellaneous Rates/Phaseouts

Most of the inflation adjusted amounts are indexed based on inflation factors as of August 31st each year.  Various tax reference sources, such as CCH and RIA, make projections based on these factors.  We have chosen to wait until the official numbers have been released.  Here are the official 2014 amounts.

Revenue Procedure 2013-35 contains most of these inflation adjusted amounts for 2014.  A copy of the Rev. Proc. can be found at www.irs.gov/pub/ by clicking on irs drop down menu and clicking on rp-13-35.  The IRA limits are found in IR-2013-86.

- Tax Rates - Ceilings
Single
10% bracket tops at $9,075
15% tops at $36,900
25% tops at $89,350
28% tops at $186,350
33% tops at $405,100
35% tops at $406,750
39.6% applies to anything over $406,750

MFJ
10% bracket tops at $18,150
15% tops at $73,800
25% tops at $148,850
28% tops at $226,850
33% tops at $405,100
35% tops at $457,600
39.6% applies to anything over $457,600

Head of Household
10% bracket tops at $12,950
15% tops at $49,400
25% tops at $127,550
28% tops at $206,600
33% tops at $405,100
35% tops at $432,200
39.6% applies to anything over $432,200

MFS
10% bracket tops at $9,075
15% tops at $36,900
25% tops at $74,425
28% tops at $113,425
33% tops at $202,550
35% tops at $228,800
39.6% applies to anything over $228,800

Estates & Trusts
15% bracket tops at $2,500
25% tops at $5,800
28% at $8,900
33% at $12,150
39.6% applies to anything over $12,150

- Exemption amount is $3,950.

- Standard deduction amounts are:  MFJ-$12,400, Single & MFS-$6,200, HH-$9,100, Additional amounts for aged/blind-$1,200 for unmarried and $1,550 for married status.

- Exemption and itemized deduction phase outs begin for MFJ at $305,050, HH at $279,650, S/HH at $254,200, and MFS at $152,525.

- Kiddie Tax
Standard Deduction is $1,000, the next $1,000 is taxed at child’s rate, and the excess is taxed at parent’s rate.  AMT Exemption amount is the child’s earned income plus $7,250.

- AMT – The exemption amounts are:
MFJ/QW = $82,100
S/HH = $52,800
MFS = $41,050
Estates/trusts = $23,500

The excess taxable income level (where the 28% AMT rate applies) is:
MFJ/QW/S/HH = $182,500
MFS = $91,250

- Adoption Credit - $13,190 is the maximum for the credit or assistance amounts.  The phase out starts at $197,880 and is completely phased out at $237,880.

- Child Tax Credit – refundable portion uses an income base of $3,000.

- Education Credits.  The phaseout for the American Opportunity Credit starts at $80,000 ($160,000 for MFJ).  The phaseout for the Lifetime Learning Credit $54,000 ($108,000 for MFJ)

- EIC maximum AGI/earned income for MFJ is $43,941 for one child, $49,186 for two children, $52,427 for three or more children, and $20,020 for no children.  The EIC maximum AGI/earned income for other taxpayers is $38,511 for one child, $43,756 for two children, $46,997 for three or more children, and $14,590 for no children.  Excessive investment income level for EIC is $3,350.

- Transportation Fringe maximum exclusion for monthly parking is $250/month and for commuter highway vehicle and transit passes is $130.

- Savings Bonds for Education phase out level starts at $113,950 for MFJ and $76,000 for other filing statuses.  This is completely phased out at $143,950 for MFJ and $91,000 for other filing statuses.

- §179 election changes to $25,000.

- Foreign Earned Income exclusion is $99,200.

- Long-term care premiums are limited to:
Age
40 or less-------$370
>40, but not >50------$700
>50, but not >60------$1,400
>60, but not >70------$3,720
>70------$4,660

- Long-term care contract benefit amount is $330 per day.

- IRA Contribution Limits – The maximum contribution to an IRA is $5,500, plus the $1,000 catchup.

- IRA Phase out ranges – MFJ phase out for IRA contributions starts at $96,000.  MFJ phase out for spouse contributions when spouse is not covered starts at $181,000.  Single and Head of Household = $60,000.  MFS starts at $0.

- Roth IRA AGI phase out limits increase to beginning levels of $181,000 for MFJ, $0 for MFS, and $114,000 for other taxpayers.

- Retirement Savers Credit – The indexed ceilings are:  MFJ - $60,000, HH - $45,000, Others - $30,000.

- Student loan interest maximum is $2,500, with a phase out starting at $65,000 ($130,000 for MFJ).  This is completely phased out at $80,000 ($160,000 for MFJ)

- Annual gift tax exclusion is $14,000, while the limit on gifts to noncitizen spouses is at $145,000.

- Attorney Fee Awards are limited to $190 per hour.

- MSA
Self-only coverage annual deductible is not less than $2,200 nor more than $3,250, with out-of-pocket limits not in excess of $4,350.

Family coverage annual deductible is not less than $4,350 nor more than $6,550, with out-of-pocket limits not in excess of $8,000.

- Cafeteria Plan – The dollar limitation for §125 health FSAs remains at $2,500.

- Nanny Tax – The wage threshold for the Nanny tax for 2014 is $1,900.

- Small Business Health Insurance Credit – The dollar amount for purposes of limiting this credit is $25,400.

- Exclusion amount for Estate/Gift tax is $5,340,000.

Annual Meeting 2013 Recap

Our Annual Meeting & Seminar in Mansfield last week was a great success!!

Kathryn Keane held everyone's attention through all four sessions. She offered much information on FBAR, ACA, AMT and last, but certainly not least, Ethics in the Real World. The meeting was a wonderful opportunity to meet and converse with other members, ask those questions that we sometimes wonder such as, "Does this only happen in my office?" It is so very nice to discover that we all have the same issues. 

If you did not have the opportunity to attend this year you missed a great educational session and we hope you will make an effort to attend the next offering. All attendees this year received a Staples Gift Card from the Chapter as a thank you for participating in our seminar.

I am  happy to welcome two new members to the Board of Directors, Sharon Cummings and Tracey Bell. I look forward to working with them in the coming year. I personally want to thank Steve Garvey and Nina Marcinowski for their time on the Board. They will be missed but I know they will remain active members of the Chapter.


I welcome your new President, Walter Matisewski and new Vice-President, June Massee.


Also I am happy to announce that Bill Delaney will remain as Treasurer and Jeff Schweitzer will continue as Secretary.


Please watch the Chapter Weekly and our very own Blog for information on the next seminar in Sturbridge this coming January.


I would like to thank all the Board Members for making my time as President very enjoyable. I look forward to working with the new officers and the new board members to continue the growth and success of our Chapter.


To all members thank you for your participation in our seminars "You are the Chapter " and your involvement is what will make our chapter successful. Please feel free to contact myself or any board member with any ideas, questions or issues you want to discuss about the Chapter.


Wishing everyone a Happy Holiday Season, relax and rest, for we all know what is around that corner!

-Christine Miarecki, Immediate Past President