Monday, January 28, 2019

Form 8965 Health Coverage Exemption Changes

The Shared Responsibility Penalty is alive and well in 2018.  The penalty will be the greater of the flat dollar penalty of $695 per person with a maximum $2085 or 2.5% of household income in excess of the filing requirement.

What is new for this year is the expansion of the exemptions available on the tax return.  The 2018 instructions for Form 8965, Health Coverage Exemptions, contain a new option entitled General Hardship, Code G, which can be selected without provided any additional proof of the hardship.  The hardship options available through the tax return contain the same 14 hardships that were available through by special application last year.

In addition to those, a 15th hardship option has been added.  It is:  You lived in a country where there is no qualified health plan offered, there is only one issuer offering coverage, or all affordable plans provide abortion coverage contrary to your beliefs.

You are still able to apply for the hardship exemption through and provide the required proof.  The application will be reviewed and if granted, an exemption certificate number will be sent to the taxpayer.  The only reason that this method may be preferred is to avoid a later IRS challenge of the hardship through audit.

Beginning in 2019, the Shared Responsibility Penalty is reduced to $0.  However, TCJA did not affect the Premium Assistance Credit.

This text has been shared with you courtesy of David & Mary Mellem, EAs & Ashwaubenon Tax Professionals.

Friday, January 25, 2019

How High Are State and Local Tax Collections in Your State?

Katherine Loughead, Analyst
Today’s state tax map shows state and local tax collections per capita in each of the 50 states and the District of Columbia. D.C.’s tax collections per capita ($10,841) are higher than in any state. The five states with the highest tax collections per capita are New York ($8,957), Connecticut ($7,220), New Jersey ($6,709), North Dakota ($6,630), and Massachusetts ($6,469). The five states with the lowest tax collections per capita are Alabama ($3,206), Tennessee ($3,322), South Carolina ($3,435), Oklahoma ($3,458), and Florida ($3,478).

While some of these results speak for themselves, others are less intuitive. For example, as a resource-rich state, North Dakota generates a substantial share of its tax revenue from severance taxes on oil and natural gas, the burden of which is borne mainly by consumers outside North Dakota. As a result, in terms of tax collections per capita, North Dakota joins the ranks of the high-tax states in the Northeast even though North Dakota’s tax burden is comparatively low.

It is also important to note that severance taxes are far from the only example of “tax exporting” states engage in. Travel taxes—such as hotel, car rental, and meal taxes—also disproportionately impact nonvoting nonresidents who have few means of redress. As a result, states that generate substantial amounts of tax revenue from tourism may also show tax collections per capita that are significantly higher than the actual tax burden that falls on the in-state population. It is important to keep both legal incidence and economic incidence in mind when evaluating the true costs of any tax.

Thursday, January 24, 2019

Final Regs on QBI Have Changes

On Friday, January 18, 2019, IRS released final regulations on the Qualified Business Income (QBI) deduction, Section 199A.  These regs (247 pages) contain changes from the proposed regs (184 pages) issued last August.  The preamble to the final regs cover almost 150 pages, leaving the remaining 90+ pages for the actual regs.  The preamble is the portion of the package where IRS discusses some of the over 300 comments it received, its thinking, and its decision.

It is extremely likely that any seminar you attended or article you read dealing with QBI prior to last Friday has information that was correct at the time, but is now different.  Here are some of the changes that affect most taxpayers.

LOSS BUSINESS – the final regs state a loss from a business must be allocated prorate to offset the profits from other businesses.  For example, Business A has a loss of 10, Business B has a profit of 60, and Business C has a profit of 40.  The total of the profits is 100.  Business B’s portion of this profit is 60% and Business C’s portion is 40%.  Business B is allocated 6 (60% x 10) of the loss, reducing Business B’s profit down to 54 for QBI calculation purposes.  Business C is allocated 4 (40% of 10) of the loss, reducing Business C’s profit down to 36 for QBI calculation purposes.

The regs also state the allocation to a Specified Service Trade or Business (SSTB) is calculated AFTER any reduction in the SSTB’s income that is required if the taxpayer’s taxable income exceeds the threshold.

QUALIFIED BUSINESS INCOME – Normally for a sole proprietorship, this would be the net income from the bottom of Schedule C.  The final regs address the following in connection with QBI:
1) The deduction of a portion of the self-employment tax reduces QBI.

2) The deduction for self-employed health insurance reduces QBI.

3) The deduction for contributions to qualified retirement plans (we believe this includes SEPs and SIMPLEs but not traditional IRAs but our opinion can change).

4) The deduction for unreimbursed partnership expenses, the interest expense to acquire an ownership in a partnership or S corporation, and state and local taxes are items the preamble states will specifically NOT be addressed currently.  (We feel the unreimbursed partnership expenses should reduce QBI, but at this time we are not expressing an opinion on the other items.)

5) Form 4797 income/losses that are carried to Schedule D are NOT QBI, while any Form 4797 income/losses that are treated as ordinary income bypassing the Schedule D are QBI.

6) Rentals – The preamble to the final regs state that meeting the real estate professional provisions of Section 469(c)(7) does NOT make a rental activity a business.  It is still based on whether the rental activity rises to the level of a business.  Notice 2019-07 covers QBI & rental activities by providing a safe harbor.  (We addressed this Notice in an email we sent out January 18, 2019.)

7) Suspended losses – QBI related to losses suspended under the passive, at-risk, or basis rules is not QBI until the suspended losses are included in the taxpayer’s taxable income.  If only part of the suspended losses is included in taxable income in a year, that prorata portion of the suspended QBI is taken into account. For example, for 2018 a taxpayer receives a Schedule K-1 showing a 12 loss and -10 of QBI.  The entire loss is suspended under the passive loss rules for 2018.  The Schedule K-1 for 2019 shows a profit of 4, which releases 4 of the 2018 loss.  Since this 4 represents 33% of the 2018 suspended loss, 33% of the -10 QBI is taken into account in 2019.  The suspended losses are based on FIFO – the first suspended losses are the first ones to be used.  The released suspended QBI is considered a separate activity and is NOT linked to the activity that created it.

8) Employee status – Basically the regs say “once an employee, always an employee.”  Briefly an employee who terminates the employee status and becomes an independent contractor doing the same work for the same company will be treated by IRS as an employee and ineligible for the QBI deduction.  This can be rebutted by the taxpayer and will be judged on the facts and circumstances.  The regs include the example of an employee who worked for the firm long enough to become a partner.  Since a partner of a partnership cannot be an employee, this is sufficient to rebut the IRS position.  This rule appears to discourage a taxpayer from recharacterizing his/her employee status to that of an independent contractor.

MULTIPLE TRADES OR BUSINESSES – The preamble states the Treasury Department and IRS feels multiple trades or businesses will generally not exist within one entity (individual, partnership, etc.) UNLESS a different method accounting could be used for each business.  Regulation §1.466-a(d) explains that no trade or business is considered separate and distinct unless a complete and separable set of books and records is kept for the business.

1) Like kind exchanges and involuntary conversions – the regs now state the “placed in service” date for the old property is the same date that would have been used if the old property still existed (in most cases this will be the purchase date of the old property).  The boot continues to use the date the new property was acquired.

The regs also state the UBIA of the old property carries over.  The UBIA of the boot will normally be the amount of boot paid.  However sometimes the UBIA of the boot will actually be lower, such as when the old property decreased in value.  If you have an exchange, we suggest you read the examples in the regs for the calculations.

2) Property contributed to a partnership under Section 721 or into a corporation under Section 351 – The regs continue to say the “placed in service” date is the date the partner or shareholder originally placed the property in service.  But the regs now say the UBIA for the partnership and S corporation is the UBIA the partner or shareholder would have used if they kept the asset.  In most cases this will be the cost of the asset to the partner or shareholder.  (The proposed regs required the UBIA for the partnership and S corporation to be the adjusted basis of the property in the hands of the partner and shareholder as of the date it was contributed to the entity.)

3) Section 754 election in place - A partnership which has made a Section 754 election has triggered §§734(b) & 743(b).  The increase or decrease in basis in assets under §743(b) will result in changes to the UBIA for the partner(s) affected by the 754 election.  Again, the regs have examples going through the calculations required for this.

4) Disposition of a relevant passthrough entity (RPE) ownership during the year.  The UBIA is allocated to the owners of the RPE based on their ownership on the last date of the year.  Therefore, any taxpayer who disposed of the ownership during the year will have an allocation of QBI and wages, but no allocation of UBIA.

1) In response to comments received, the regs provide more examples of various SSTB categories, especially in the field of health.

2) The final regs state a business that has ANY SSTB is considered to be an SSTB except if it meets the di minimis provision.  The di minimis provision did not change from the proposed regs and states the entity is not an SSTB if its average annual gross receipts is not over $25,000,000, and less than 10% of its gross receipts is from an SSTB.  This percentage is lowered to “less than 5% for those businesses that have average annual gross receipts of over $25,000,000.

3) A business that provides part of its property, products, or services to a commonly controlled SSTB (at least 50% common ownership) operated by an individual or RPE has to treat that portion of its business as an SSTB.  The remainder of the business is an eligible QBI if it meets the normal provisions of QBI.  In a way this contradicts the statement above that says “ANY” SSTB, but this is the way we read the regs.

1) Each RPE must passthrough to its owners the proper allocated QBI, wages, and UBIA.  These items need to be reported for each business the RPE has AND be further identified as an SSTB if applicable.  These items are noted in the OTHER box of the Schedule K-1.  The amounts shown in boxes 1 & 2 of the Schedule K-1 may not be the same amount as the QBI.

2) The recipient of the Schedule K-1 does have to use common sense and may need to contact the RPE if information appears to be missing.

3) The regs say:
- Failure to passthrough wages means the activity does not have wages.
- Failure to passthrough UBIA means the activity does not have UBIA.
- Failure to passthrough POSITIVE QBI means the activity does not have positive QBI.  This implies the taxpayer cannot ignore a Schedule K-1 that appears to have a negative QIB.

4) The RPE can amend the Schedule K-1 to report this information up through the RPE’s normal 3-year statute of limitations.

1) An election to aggregate multiple businesses can be disregarded by IRS if the election is not attached to the return.  Once IRS disaggregates the businesses, the taxpayer cannot re-aggregated those same businesses for the following three tax years.

2) An aggregation elected by an RPE cannot be ignored by the recipient of the Schedule K-1, although the recipient can elect to add to the aggregation for any OTHER businesses the recipient has that qualify.

3) The aggregation election cannot be made on an amended return with the exception of the 2018 return.  IRS feels making the exception for 2018 is reasonable since this is new.

4) An aggregation election does NOT have to be made in the first year.  It can be made in any year and is binding for all future years after made.

FINAL TEST CALCULATION – The final test calculation takes taxable income and reduces it by the net capital gains.  The proposed regs said this was the net long-term capital gains from Schedule D less any net short-term capital losses.  The final regs keep this same definition BUT qualified dividends are also considered “net capital gains” for this purpose.

Why did these changes happen?  Partly because comments were sent to IRS with concerns, suggestions, and clarification requests.  Your voice can be heard if you want it heard.  The preamble contains information on submitting comments to IRS.

News Release 2019-04 contains links to the final regs discussed above as well as links to the official Revenue Procedure 2019-11 which defines “wages” for purposes of QBI, Notice 2019-07 containing a proposed Revenue Procedure dealing with QBI & rental activities, and proposed regs dealing with suspended losses as well as RICs.

You can find this News Release by going to and entering “IR-2019-04” in the SEARCH box and then clicking on the link in the news release.

If you have questions about a certain area of QBI, you should check the examples in the regs because they may illustrate your issue.

THE END (for now).

This text has been shared courtesy of David & Mary Mellem, EAs & Ashwaubenon Tax Professionals.

Wednesday, January 23, 2019

Rhode Island Division of Taxation Lists Software Cleared For E-File

The Rhode Island Division of Taxation has cleared for use a number of tax-preparation software programs for electronic filing for tax year 2018. These programs have completed and passed acceptance testing for tax year 2018 for e-filing purposes. The list, which is now on the Division’s website, will be updated as needed.

(Note: Although the Rhode Island filing season officially begins January 28, some software providers may allow e-filing in advance of that date and hold the completed returns until the season officially starts.)

The Rhode Island Division of Taxation this filing season will accept the following returns under its electronic filing program:

  • Form RI-1040
  • Form RI-1040NR
  • Form RI-1120C
  • Form RI-1120S
  • Form RI-1065

Monday, January 21, 2019

IRS Addresses QBI and Rental Properties

On Friday, January 18, 2019, IRS released Notice 2019-07 with a title of “Section 199A Trade or Business Safe Harbor:  Rental Real Estate.”  Finally, we receive better guidance from IRS on QBI & rentals other than “read case law”, especially since case law is not consistent.  We really like the part of this Notice where it says “The Treasury Department and the IRS are aware that whether a rental real estate enterprise is a trade or business is the subject of uncertainty for some taxpayers.”  Yes, we thought you would enjoy a little humor before reading the details of the Notice.  Inside the Notice is a 7-page proposed revenue procedure containing the requirements.  Here is a summary of the safe harbor rules for rental real estate enterprises (rentals) and QBI.  Read the Notice for all of the details.

1) The rental must be held directly or through a disregarded entity.

2) The taxpayer must EITHER:
- a) Treat each rental as a separate activity, or
- b) Treat all similar (commercial and residential are NOT similar) rentals as a single activity.

In other words a taxpayer wanting to treat multiple rentals as a single activity would have TWO activities – one commercial rental and one residential rental.  Once this treatment is made, it must continue unless there has been a significant change in facts and circumstances.  This is a “one or all” option.  For example a taxpayer with three residential rentals can’t choose to combine two out of the three, it’s either keep each one separate or combine all three.

3) Separate books and records are kept for each rental.

4) “250 hours test.”  For years beginning prior to January 1, 2023, the taxpayer must perform 250 or more hours of “rental services” during the year with respect to the rental.  (Editor note:  This provision may require some taxpayers to make the “treat as one” election in order to qualify.)  For taxable years beginning after December 31, 2022, this “250 or more” test must be met in any three of the five consecutive years including the current year.  If the rental has been held less than five years, the “five” is replaced with the number of years the rental has been held.  These hours can be performed by the taxpayer or employees, agents, and/or independent contractors of the taxpayer.

4)  The taxpayer maintains contemporaneous records, including time reports, logs, or similar documents, regarding the following:
-- Hours of all services performed,
-- Description of all services performed,
-- Dates on which such services were performed, and
-- Who performed the services.

“Rental services” for this purposes include:
i) Advertising to rent the property,
ii) Negotiating and executing leases,
iii) Verifying information contained in prospective tenant applications,
iv) Collection of rent,
v) Daily operation, maintenance, and repair of the property,
vi) Management of the real estate,
vii) Purchases of materials, and
viii) Supervision of employees and independent contractors.

“Rental services” for this purpose does NOT include financial or investment management activities, such as:
i) Arranging financing,
ii) Procuring property,
iii) Studying and reviewing financial statements or reports on operations,
iv) Planning, managing, or constructing long-term capital improvements, or
v) Traveling to and from the real estate.

Rentals that do NOT qualify for this safe harbor treatment include:
a) Real estate used by the taxpayer or an owner of a passthrough as a residence for ANY part of the year under the vacation home rules of Section 280A, or
b) Rentals under a triple net lease.

STATEMENT REQUIRED - To use this safe harbor provision the taxpayer must attach a statement to the tax return that the requirements of Section 3.03 of Revenue Procedure ____(currently unnumbered)___ have been met.  The statement must be signed by the taxpayer or the passthrough entity’s authorized representative.  The statement must also include:  “Under penalties of perjury, I (we) declare that I (we) have examined the statement, and, to the best of my (our) knowledge and belief, the statement contains all the relevant facts relating to the revenue procedure, and such facts are true, correct, and complete.”  The signer must have personal knowledge of the facts and circumstances related to the statement.

Although this safe harbor is proposed to apply to taxable years ending after December 31, 2017, it is not effective until it is published in final form, BUT taxpayers can apply it immediately.

This applies to all taxpayers, including passthrough entities such as partnerships.

Remember that this is a safe harbor provision.  This means a taxpayer who meets these rules can treat the rental property as QBI.  If the taxpayer doesn’t meet the safe harbor rules, the rental property may still qualify as QBI if it meets the definition of a trade or business.  (In other words, you can still argue about the issue.)

This News Release 2019-07 also contains links to the finalized regulations and the official Revenue Procedure 2019-11 which defines “wages” for purposes of QBI.  These two items are very similar to the proposed regulations and revenue procedure IRS issued back in early August.

IRS also released additional proposed regulations on QBI which we are currently reading.

You can find this QBI package by going to and entering “IR-2019-04” in the SEARCH box and then clicking on the link in the news release.

This text has been shared courtesy of David & Mary Mellem, EAs & Ashwaubenon Tax Professionals.

Friday, January 18, 2019

New for Massachusetts - Paid Family Medical Leave Law

William Delaney, EA
Westwood, MA
RI already mandates paid family leave.  Now comes MA with House Bill 4640.  Effective 7/1/2019, a notice describing this benefit must be posted in each workplace.  Also, within 30 days of hiring, employees must receive written information (either prepared by or approved by MA) explaining the benefits, etc.

All employers are covered.  There is NO minimum number of employees---one is sufficient.  A covered individual is your current employee (regardless of length of service), or a former employee (within 26 weeks of separation).  Also, if they so elect, self-employed may be covered.

Benefits will be paid from the Family and Employment Security Trust Fund.  The money will actually come from a payroll tax on employers – initial contribution rate of 0.63% of all wages paid.  ($40,000 x .0063 = $252)

Employers with 25 or more employees:

Up to 40% of the medical leave contribution may be deducted from the employee’s wages.  The employer is responsible for remitting 100% of the tax.

Up to 100% of the family leave contribution may be deducted from the employee’s wages.  The employer is responsible for remitting 100% of the tax.

Employers with fewer than 25 employees in Massachusetts:

The employer is not required to pay the employer portion of the tax.  The employee is still subject to payroll deduction (see above for 25 or more employees) for his/her share of the tax.

A “covered business entity” (a business which contracts with self-employed individuals and is required to issue federal form 1099-Misc) is subject to the same requirements as to deductions and remittances as outlined above.

Regulations to follow on or before July 1, 2019.  Your Editor assumes that the tax and withholding obligations will be effective July 1, 2019.  The statute does not specify a start date.  Paid leave will not be available until 2021 – effective date not clear; the language in the statute is inconsistent and needs clarification.

Thursday, January 17, 2019

Basis Computation Required

Did you happen to look at the 2018 Schedule E, page 2?

Part II of the Schedule E is the place you report the income from partnerships and S corporations.  You’re familiar with entering the name, EIN, a box to check if the at-risk limits apply, etc.  This year we have a new box (e) which says “Check if basis computation is required”.  The directions above line 27 says “Income or Loss From Partnership and S Corporations - Note:  If you report a loss, receive a distribution, dispose of stock, or receive a loan repayment from an S corporation, you must check the box in column (e) on line 28 and attach the required basis computation.”  The word “must” in this sentence is bolded on the IRS form.

This appears pretty strongly to mean we MUST attach a basis worksheet if any of these items apply.  Pages E-8 and E-9 of the directions for Schedule E discuss limiting losses by applying the basis rules.  These directions specifically mention basis must be computed before claiming losses and refers you to worksheets found in the Schedule K1 instructions.  The directions do not mention attaching basis to the return for partnership limited losses but do specifically state basis computation must be attached in connection with S corporation items mentioned above.

This text has been shared with you courtesy of David & Mary Mellem, EAs & Ashwaubenon Tax Professionals.

Thursday, January 10, 2019

IRS Offers Tips to Tax Professionals to Reduce CAF Number Errors, Better Protect Data From Cyberthieves

The Internal Revenue Service has outlined common errors that may delay processing of Centralized Authorization File (CAF) numbers. Reducing errors in CAF applications is one way to speed the approval process for tax  professionals.

The IRS also reminded tax practitioners that CAF numbers are valuable cybercriminal targets and outlined steps tax professionals should take annually to help protect their CAF number from misuse.

The IRS annually processes 3.5 million paper Forms 2848, Power of Attorney and Declaration of Representative, and Forms 8821, Tax Information Authorization. The Form 2848 grants eligible practitioners the authorization to represent a client before the IRS. The Form 8821 grants individuals or organizations the authorization to inspect a client’s tax records.

When practitioners submit Forms 2848 or 8821 for the first time, they are issued a nine-digit CAF number that they use as an identifier on all their future third-party authorization requests. During fiscal year 2018, the IRS rejected 384,081 authorization requests.

Issues that cause an IRS CAF assistor to reject the Forms 2848 or 8821 are as follows:

  • Lack of an original pen and ink signature (i.e. use of a digital signature, no signature or use of a signature stamp) by the Taxpayer.
  • The Representative Designation is not complete on page 2 of Form 2848.
  • Level H designation on Form 2848 requires the signor to have prepared the tax return.  If the signor did not prepare the return, as verified by the CAF assistor, then this is a basis for rejection.
  • The Representative information requested is incomplete or missing on Form 2848. This includes the Designation; Licensing Jurisdiction or Authority; Bar, License, Certification, Registration or Enrollment Number or representative signature and/or date.
  • Check of the box 6 to add a new designee but retain the former designee.  A copy of the old Form 2848 is required to retain the prior authorization; however, the copy is not attached.
  • The Forms 2848 or 8821 are missing the required Taxpayer and/or Representative identification information.
  • The Tax Matter identification is not specific.  The completion of “all years” or “all future periods” is not acceptable.  This needs to be specific tax modules.
  • The title of the Officer of the Business and/or Company (if applicable) is blank.
  • The date of the Taxpayer signature is blank.

The average processing time for a third-party authorization request is less than 5 days. Because this is a manual process, it is important that tax practitioners also submit accurate forms to avoid delays.

The IRS urges tax practitioners to protect the CAF numbers just as they would their Electronic Filing Identification Numbers (EFINs) and Preparer Tax Identification Numbers (PTINs).

However, as cybercriminals target tax practitioners for data thefts, more CAF numbers are falling into crooks’ hands. Today’s identity thief is just as knowledgeable about tax practices as technology. The IRS has noticed an increase in criminal’s efforts to pose as a tax practitioner using a stolen CAF number or to fax one of the third-party authorization forms using a stolen CAF number.

Here are a few steps tax professionals can take to protect their CAF numbers:

  • Make a data security plan and take sound security steps to protect all taxpayer data as outlined in Publication 4557, Safeguarding Taxpayer Data.
  • Make an annual review of the firm’s third-party authorizations. Prior to filing season is a good time to review the list of clients represented.
  • If the list includes clients who are no longer represented, fax a copy of the authorization form to the IRS CAF unit with the word “Withdraw” written at the top. Review Publication 947 for details.
  • Be aware of data theft signs, which include the receipt of tax transcripts for clients that you either did not request or taxpayers you do not represent.
  • Contact the Practitioner Priority Service telephone line if the CAF number has been stolen, if there is suspicion it’s being misused or if transcripts are being received that were not requested.

Tuesday, January 8, 2019

Tax Refunds Will Be Paid During Shutdown, White House Says

Mike Pence, Vice President
United State of America

New policy meant to ‘mitigate the impact’ of shutdown, Vice President Mike Pence says

The IRS will pay tax refunds even though the agency is subject to the federal government shutdown, after the Trump administration reversed a longstanding policy.

The decision, announced Monday by the White House Office of Management and Budget, would remove one of the biggest potential pains for Americans from the shutdown and allow hundreds of billions of dollars to flow once tax filing opens later this month in the event that the shutdown lasts that long.

The administration is trying to make the shutdown as “painless as possible consistent with the law,” Russell Vought, the acting OMB director, told reporters.

“We’re going to continue to take steps like that to mitigate the impact,” Vice President Mike Pence said of the tax refunds.

Until Monday, the Trump administration and its predecessors had said refunds couldn’t be paid while the IRS was shut because that wasn’t necessary to protect life or government property.

IRS Confirms Tax Filing Season to Begin January 28

WASHINGTON ― Despite the government shutdown, the Internal Revenue Service today confirmed that it will process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled.

“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” said IRS Commissioner Chuck Rettig.

Congress directed the payment of all tax refunds through a permanent, indefinite appropriation (31 U.S.C. 1324), and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse.
The IRS will be recalling a significant portion of its workforce, currently furloughed as part of the government shutdown, to work. Additional details for the IRS filing season will be included in an updated FY2019 Lapsed Appropriations Contingency Plan to be released publicly in the coming days.

“IRS employees have been hard at work over the past year to implement the biggest tax law changes the nation has seen in more than 30 years,” said Rettig.

As in past years, the IRS will begin accepting and processing individual tax returns once the filing season begins. For taxpayers who usually file early in the year and have all of the needed documentation, there is no need to wait to file. They should file when they are ready to submit a complete and accurate tax return.

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019 for most taxpayers.  Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17, 2019 to file their returns.

Software companies and tax professionals will be accepting and preparing tax returns before Jan. 28 and then will submit the returns when the IRS systems open later this month. The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds.

Friday, January 4, 2019

Massachusetts Differences for 2018 - Did You Know?

Alimony – MA did NOT adopt the recent federal changes to alimony (for agreements on or after 12/31/18). It is income to the recipient and a deduction for the payer even if NOT reportable on the federal tax return. Not likely to be an issue until tax year 2019.

Like-kind-exchange - For federal purposes, like-kind exchanges now apply only to real property. For MA purposes, the prior law is still in place. Example: a trade-in of a business vehicle is a like-kind exchange. Gain/loss is computed and rolled into the cost of the replacement vehicle (MA tax treatment). However, the gain is now currently recognized for federal tax purposes.

Sec. 199A Qualified Business Income Deduction - Not a deduction on the MA return.

Sec. 217 Moving Expense Deduction – Not allowed for federal purposes; still ALLOWED for MA purposes. MA has designed a worksheet (found in the instructions for form MA-1) which will calculate the allowable deduction.

Form 2106 Expense Deductions – Gone for BOTH federal and MA purposes.

Your Editor’s take from attending a recent MA update by Mass. Taxpayer Advocate
Dana Ackerman.

Tuesday, January 1, 2019

Chapter President's Message

Ronald Fisher, President
Massachusetts/Rhode Island Chapter

I consider it a great honor and privilege to begin my term of President of the Massachusetts/Rhode Island NATP Chapter.  Especially in this unique time in history where tax changes are rocking our profession.  Luckily for me, I will be leading an extraordinary Board of Directors (including many past presidents) who all have an enormous amount of energy and passion.  I could not have hoped for a more dedicated team of colleagues to share this experience and rely on their wise counsel.

I hope everyone is prepared for the 2019 tax filing season where we will all be dealing with some of the biggest changes in tax law in a very long time. I don’t know about anybody else, but this could very well be one of craziest seasons in my 38 years preparing tax returns.  All of the changes that took place in 2018 will be a hindrance to us and our clients. These changes are going to both help and hurt the way we can take care of our client’s needs.

This is YOUR Chapter and the Board is here for you.    I would like to ask something of each of you reading this:  take a moment and write down ways this Chapter can add value to your business.  Seriously, what can we do to help you?  Not what National NATP can do, but focus solely on this Chapter.  After you figure out what you need from us, e-mail me at:  This will be a feedback mechanism to allow you to come up with ideas that I can share/discuss with the board.

There are many things that are ever changing in the tax world, and these require us to keep on our toes.  These changes require us to have more education and knowledge to help our clients.  Your Chapter provides support, education and local networking opportunities for its members including:

  • Regularly updated Chapter Website with news and information on not only IRS issues but issues local to Massachusetts & Rhode Island, also contact info for any of our Board of Directors –
  • Hosting meetings where members can exchange ideas, solve problems, and discuss issues with other tax professionals in their area.
  • Volunteering to provide individual support and expertise about state and local tax issues to members through website, newsletters, meetings, and e-mail communications.
  • Offering live local education seminars on Federal, state and local tax topics.
  • Interfacing with the NATP National Office to make current information available on the Chapter website, enabling members to get updates on issues in other states.
Your Chapter has the following upcoming events in 2019 that you will not want to miss:
  • January 3rd 2019 – Annual State & Mini Federal Update Seminar – the only seminar around where you can get 2 hours of Federal Tax Update CE hours plus presentations from 4 Different states (MA, RI, CT, NY) ALL IN ONE DAY!!  Held at the Southbridge Hotel & Conference Center. Check the chapter website for registration details.
  • In June, we usually have a half day educational seminar with current hot topics and it is held at a central location in the Worcester/Marlboro area.  (2019 Date TBA)
  • October 22nd 2019 – Annual Federal Seminar & Chapter Annual Meeting 7-8 Hours of Federal Tax Update CE Hours plus nominations, elections, state of our chapter – this is open to ALL members and ALL are encouraged to get involved. Held at the Mansfield Holiday Inn.

I encourage all of you to register and participate in these Chapter events.  It is the best way for you to meet, connect and build solid professional relationships with other local tax preparers who share similar experiences.  All in a relaxed setting and at a reasonable cost. 

I wish you all a healthy and prosperous new year and I also hope to see all of you at one (or all) of our 2019 seminars.