TaxEsqBlog

IRS Releases 2010 Data Book

2011-03-15T14:06:00.000-04:00

The IRS has released the 2010 Data Book listing information about returns and IRS Activities.IRS Releases 2010 Data Book

Little Leagues Must file 990 with IRS

2011-01-28T20:57:00.002-05:00

All non profit organizations, including local Little Leagues, must file annually with the IRS. If the 990 is not filed, the Local Little League will lose its tax exempt status. See Notice

Congress Finally Addressing Tax Reform

2011-01-24T11:52:00.002-05:00

Congress refused for over a decade to make the Estate and Gift Tax law changes. They only passed a last-minute 2 year extension in December. The Internal Revenue Code was last overhauled in 1986 in the Reagan era attempt toward simplification. Since then, more than 20,000 amendments and additions have been made. The result is a patchwork mess which is filled with "tricks" and "gottchas" making the Tax Code incomprehensible.

THe other issue is the high tax rates and the taxation of worldwide income. Most developed countries, including those in the European Union, only tax income earned in their own country. This worldwide taxation puts US companies and citizens at a big disadvantage. This hurts jobs and the economy. See WSJ article.

Spouses can combine $10 Mil Estate Tax Exemption

2011-01-05T10:14:00.002-05:00

Starting in 2011 widows and widowers can add to their own estate tax exemption the unused exemption of the spouse who died most recently. This provision, plus an increase in the exemption amount to $5 million per person, enables married couples together to transfer as much as $10 million tax-free to their children or other heirs, either by making lifetime gifts or through estate plans. This 2-year provision expires January 1, 2013

Brooklyn Bar Owner Jailed for not Paying $1.3M in Sales Taxes

2011-01-05T06:27:00.000-05:00

Brooklyn Bar Owner Jailed for not Paying $1.3M in Sales Taxes
On December 30, 2010 The principal owner of The Kettle Black, a popular sports bar and restaurant in the Bay Ridge section of Brooklyn, has pleaded guilty to stealing more than $1.3 million in city and state sales taxes over a five-year period. More

Qualified Improvements

2010-12-22T11:04:00.002-05:00

15-Year Recovery Period for Qualified Improvements

The Tax Bill signed December 17, 2010 extends the 15-year recovery period through 2010 and 2011 for:

Qualified leasehold improvements
Qualified restaurant improvements, and
Qualified retail improvements.

The 15-year recovery period previously expired at the end of 2009. The extension applies to 2010 as well as 2011.

Expense Limits Increased to $125k

2010-12-22T11:01:00.002-05:00

Code Sec. 179 Expensing Limits

Internal Revenue Code Sect. 179 expensing limits were raised to $125,000 with a $500,000 investment limit for 2012. The 2010 Small Business Jobs Act, which was signed in September, raised the expensing limits to $500,000 with a $2 million investment limit for 2010 and 2011. It also permitted, for the first time, expensing of up to $250,000 of Qualified Real Property, such as qualified leasehold, restaurant or retail improvements. The expensing of Qualified Real Property was not extended in the new tax act.

Bonus Depreciation -100%

2010-12-22T10:59:00.001-05:00

Bonus Depreciation

The Tax Bill signed December 17, 2010 provides 100% First Year Bonus Depreciation created for qualified improvements made after September 8 2010 and before January 1, 2012. Bonus depreciation reverts back to 50 Percent for qualified 2012 improvements.

IRS issues new withholding tables

2010-12-20T12:10:00.002-05:00

the Internal Revenue Service has issued new withholding tables based upon the changes in tax law reducing withholding for 2011.

Even though most employers use payroll services, it is a good idea to print out and read the chart so employees can understand the changes.

2010 Estate and Gift Tax Changes

2010-12-19T16:42:00.003-05:00

Here is a detailed Explanation of the Estate and Gift Tax Changes:

2010

Estate Tax
*Basic exclusion amount: $5,000,000 Formerly called applicable exclusion amount
Unified credit: $1,730,800

*Maximum tax rate: 35%
Level where 35% rate begins: $500,000 But no tax until taxable estate + gifts > $5m

* Step-up in basis: Full step-up, unless estate elects out of estate tax

State death tax deduction: Still available on Line 3b (as it was in 2005-2009)

*Due date: No earlier than nine (9) months after date of enactment

*Carryover basis: Applicable only if estate elects out of estate tax

*Max basis increase available: $1.3m (plus $3m for property passing to spouse)

*Due date of new form (8939): No earlier than nine (9) months after date of enactment
Penalty for failure to report to the IRS: $10,000 per failure

Penalty for intentional disregard: 5% of FMV of property
Penalty for failure to report to beneficiaries/donee: $50 per failure

Capital gains tax rate: Proceeds in excess of adjusted tax basis subject to tax at the
applicable capital gains rate when sold (currently 15%).

Gift Tax No change
Exclusion amount: $1,000,000 (no change)
Maximum tax rate: 35% (no change)
Due date: April 18, 2011 (Emancipation Day observed on Friday, April 15, 2011)

New Estate Tax Law

2010-12-19T16:22:00.003-05:00

Here is a quick summary of the new Estate Tax rates signed into law December 17, 2010

2010
Estate Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35%
Carryover basis: Option to elect carryover basis instead of estate tax treatment

Gift Tax
Exclusion amount: $1,000,000 (no change)
Maximum tax rate: 35% (no change)

2011-12
Estate Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35%

Gift Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35% (no change)

Tax Bill Signed into Law

2010-12-18T13:49:00.000-05:00

President Obama signed the Tax Extesnion into law. This continues the tax rates for 2 more years. Unfortuantely, Congress refuses to address tax simplification and making tax reduction permanent.

What will Happen to Estate Tax

2010-12-16T13:07:00.003-05:00

The Democrats in the House are vowing to fight the Estate Tax exemption of $5m approved in the Senate. If no action is taken by December 31, the exemption will fall to $1m. Remember, this includes proceeds from Life Insurance policies, IRA's, pension plans, homes and real estate. Many estates will be heavily taxed (up to 55%.)

"Retreat Center" Gets Property Tax Exemption

2010-08-26T09:47:00.002-04:00

A New York state appeals court held a center founded by a Catholic Priest, providing "spiritual renewal" to Catholics, partly by inspirational art created by visitors, is entitled to the property tax exemption denied by town officials. The court determined the group demonstrated sufficient proof that its complex is a "retreat" eligible for a charitable tax exemption under the state's Real Property Tax Law.
Full Article

We Hold These Truths...

2010-07-02T14:07:00.001-04:00

Thank you Founding Fathers! Please read the Declaration of Independence: http://www.taxesq.com/declaration.pdf

IRS Going After NonProfits

2010-06-21T11:41:00.002-04:00

Nonprofit organizations that do not file 990's can lose their exempt status. Previously, only nonprofit organizations that have more than $25,000 of income had to report. Now all month profits must report. The IRS is trying to promote the concept of this is to protect donors but in reality it just makes it much harder for a small nonprofit to remain in existence.

If you are a small nonprofit organization you must contact your tax lawyer right away to make sure you do not lose nonprofit status.

IRS Focuses Audits on Smaller Businesses

2010-04-13T20:01:00.002-04:00

Even the the return is much greater for auditing large businesses, the IRS is focusing on auditing small businesses reports Atlantic Monthly. The reason is large firms have the resources to fight the IRS and drag on audits while smaller companies do not hire the tax attorneys needed and lack internal resources. The IRS finds it easier to pick on the "little guy."

Foreclosures will Increase

2010-03-14T20:02:00.002-04:00

The Washington Post Reported:

The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.

About 5 million to 7 million properties are potentially eligible for foreclosure but have not yet been repossessed and put up for sale. Some economists project it could take nearly three years before all these homes have been put on the market and purchased by new owners. And the number of pending foreclosures could grow much bigger over the coming year as more distressed borrowers become delinquent and then, if they can't obtain mortgage relief, wade through the foreclosure process, which often takes more than a year to complete.

Solutions include Mortgage Loan Modifications and short sales

Government requires NonProfits to Incur Accounting Expenses

2010-03-11T14:14:00.001-05:00

Nonprofit groups are paying a price for the corporate and accounting misdeeds of Enron, Tyco International and others nearly a decade ago.That price is manifested in increased tax-preparation and auditing fees.

In simple terms, the federal government now requires nonprofit groups to provide more extensive information at tax time to make sure they are functioning correctly.
Click Here for the full article

Tax Simplification? A Bill Languishes in the Senate

2010-02-26T20:50:00.001-05:00

The Bipartisan Tax Fairness and Simplification Act of 2010, would also eliminate the alternative minimum tax and reduce the number of individual tax brackets from the current total of six to three: 15 percent, 25 percent and 35 percent. The bill would nearly triple the standard tax deduction. Wyden and Gregg plan to make it possible for most taxpayers to file a simple one-page 1040 form, and allow individuals and families to request that the IRS prepare a tax return for them to review and sign.

To encourage small business growth, those with gross annual receipts of up to $1 million would be able to permanently expense all equipment and inventory costs in a single year. To help American corporations compete internationally, the Wyden-Gregg bill would reduce the top corporate tax rate of over 35 percent and replace the existing six corporate rates and eight tax brackets with a single flat rate of 24 percent. Wyden-Gregg would reduce corporate tax rates approximately 30 percent — below the corporate tax rates of Canada, Germany, France, and many other U.S. trading partners — to help U.S. domestic and multinational corporations to better compete in a global economy.

U.S. = the New Greece

2010-02-10T13:07:00.002-05:00

Greece is having Massive Economic Problems. Germany is trying to bail it out so it does not pull down the EU and the World economy. Greece is yet one more example of a government offering its population loads of benefits, while at the same time, running an economy too weak to generate the necessary cash. (It actually sounds a lot like the U.S.!) Some economists are concerned that a move like this by Germany might be a quick fix, but that the runaway deficits in some of the PIIGS (Portugal, Italy, Ireland, Greece, Spain) are still a major cause for concern. Greece, for example, is being asked by the EU to decrease its current deficit of 13% to just 3% by 2012, and we all know how tough it is to reign in government spending. (Again, it certainly sounds like the U.S.!)

With 6 unempliyed Americans looking for every job, it is certainly time to get the government out of the economy!

Estate Tax in Limbo for 2010

2010-01-11T23:49:00.001-05:00

The death tax, as many refer to the Estate Tax, was changed earlier in the decade so that in 2009 it would impose a tax rate of 45 percent to the estates of people who die with more than $3.5 million in assets. Before the law was changed — back in 2001 — the death tax had applied a tax rate up to 55 percent on estates in excess of $1 million. Now, without action on the part of Congress to set up a plan or new law for the estate tax, in 2010 there is no tax on estates of persons dying this year. In 2011, however, the law will revert back to how it existed before the 2001 law change, with a $1 million exemption and up to 55 percent tax on the deceased’s assets following a death.

Under the 2009 law, just 6,000 estates throughout the country would have had to pay the estate tax. In 2011, when all estates worth more than $1 million will be subject to the death tax, more than 61,000 estates could be affected.

Note many States "decoupled" with the Federal Estate Tax Exemption and apply a State Estate Tax usually for estates exceeding $675,000. This results in many estates dealing with State Death Taxes.

US 4th in Business

2009-12-19T17:05:00.003-05:00

The World Bank's Doing Business 2010 report lists Singapore, New Zealand and Hong Kong as the top 3 places to do business in the world. The US Ranks number 4. The US's strengths are employing workers, protecting investors and getting credit (this last item makes me wonder about the difficulties in other countries!) The U.S. is closely followed by the U.K, Denmark, Ireland, Canada and Australia.

The full report is on our Extranet. If you do not have a sign-on, call us at 856 665-2121.

Existing Home Sales Increase in October

2009-11-24T12:16:00.002-05:00

Existing Home Sales Increase in October

In October, existing home sales rose by 10.1% and are now 23.5% above the year-ago rate. Sales were at a seasonally adjusted annual rate of 6.10 million, up from 5.54% in September and a 4.94 million pace a year ago.

Existing single family home sales rose by 9.7% to a 5.33 million pace, while condo sales soared by 13.7% to a seasonally adjusted annual rate of 770,000. Click Here for full article.

Congress Fiddling on Estate Tax Reform

2009-11-20T11:15:00.001-05:00

Congress has not fixed the Estate Tax. The current estate tax rate is 45 percent with an exemption level of $3.5 million for individuals and $7 million for couples. Unless something is done, in 2010 the rate and exemption level will fall to zero and then jump up to 55 percent and $1 million, respectively, in 2011.

States Attack Business

2009-11-11T21:40:00.004-05:00

States Attack Business!

In order to collect more money to pay for their profligate spending many states are hiring collectors and placing judgments against taxpayers who owe taxes. Many states are trying to declare businesses as being resident of their state and therefore requiring them to register and pay taxes with the state. New York is leading the attack, but others are quickly following suit.

Full Article....

New Homebuyer Tax Credit Extended

2009-11-09T10:11:00.002-05:00

The New Home Buyer Credit is Extended!

First time home buyers receive a $8000 credit for purchase made before April 30, 2010.
Existing homeowners who have lived in their home more than 5 years (out of the last 8) can get a $6500 credit.
The credit is for couples with Adjusted Gross Income of less than $250,00 ($125,000 for individuals.)
The house purchased must be less than $800,000
The purchaser must be over 18
If the house is purchase prior to the tax return filing, it may be considered as purchase prior to December 31 of the previous year and included in that years tax return.

IRS Employee Steals Money from Mail

2009-11-05T11:59:00.002-05:00

IRS Employee Going to Jail for Stealing Money from Mail!

An IRS employee in Kansas City opened taxpayer mail and stole cash payments. Even though she is going to jail, the poor victims are out of money! This should act as a reminder to NEVER MAIL CASH especially to the government,

Trick or Treat Obama Style

2009-10-31T17:43:00.002-04:00

As unemployment climbs to new highs, President Obama is claiming credit for 640k new jobs "created" be spending taxpayer's money. The $1 trillion dollar stimulus went to big banks and union industries that are rapidly lowering their workforces and eliminating jobs. The money is taken from individuals and small businesses that increase productivity and sent to Washington and the big banks. No country has every taxed and spent its way to riches and it cannot happen now!

IRS Increasing Audits of Businesses with Subcontractors!

2009-10-19T21:59:00.002-04:00

IRS Increasing Audits of Businesses with Subcontractors!

The Wall Street Journal reported today the IRS is attacking business. Established and growing companies are being audited by the Internal Revenue Service to force compaies to treat independent contractors as employees. Construction subcontractors, cable installers, drivers, dancers, and other normal independent contractors are being argued as employees. All businesses should have their tax attorney review there employee and independent contractor agreements and documents.

New Jersey Government is Bad for Business

2009-09-26T12:58:00.002-04:00

New Jersey government has raced towards the goal of being the worst place in the country for business. The highest real estate tax, aggressive tax administration and ridiculous regulations combine to make New Jersey a poor choice for new business. The " nonprofit, nonpartisan Tax Foundation's...annual State Business Tax Climate Index found the state's tax structure was the least hospitable to economic growth, and its survey of census data on property taxes found New Jersey's were tops in the nation."

the Atlantic City Press.

Big Taxes Leading us to another Great Depression?

2009-09-26T08:38:00.003-04:00

Economist Arthur Laffer warned the Federal Reserve and the government may have avoided financial disaster last year current policies may be leading us into a second Great Depression. Laffer believes Federal Reserve Chairman Bernanke desperately wanted to avoid the mistakes of the 1930s by not creating a “tight money” economy which prolonged the Great Depression.

Laffer credits the Fed for keeping Fed Fund rates close to zero, but warns that is was not tight money and higher interest rates alone that caused the Great Depression to become so bad and last so long. Laffer said in a Wall Street Journal article this week that protectionist trade policies and big tax hikes are what ultimately turned a recession into the Great Depression.

It began with the Smoot-Hawley trade legislation that slapped tariffs on foreign goods, which quickly triggered a huge response of trade retaliation by the United States global trading partners. This trade war paralyzed U.S. and global economies. Then, States enacted big domestic tax hikes that further slowed the economy.

Laffer thinks the current Obama Administration is already sparing with China over trade and tariffs (tires and chicken), and starting massive government programs that will require increased taxes to pay for them. Adding to the tax hikes is he possible ending of the capital gains and dividend tax cuts in 2010, and you can see why Laffer is worried about a repeat of what he thinks made the Depression worse.

13% of Mortgages in Trouble!

2009-08-21T21:01:00.001-04:00

13% of Mortgages in Trouble!

At the end of the second quarter, 4.3% of all residential mortgages were in some part of the foreclosure process, up from 3.85% at the end of the first quarter and 2.75% a year ago. In addition, on a seasonally adjusted basis, 9.24% of all mortgages were delinquent (behind by at least one payment), up from 9.12% at the end of March, and just 6.41% at the end of June 2008.Both were records since the Mortgage Bankers Association (MBA) started keeping track back in 1972. On a non-seasonally-adjusted basis, the delinquency rate was not quite as bad at 8.86%, but still a record.That means that 13.16% of all residential mortgages (NSA basis) are in trouble. Click Here for full article.

New Offer In Compromise Forms

2009-07-25T12:06:00.002-04:00

New IRS Offer In Compromise Forms

The Internal Revenue Service has released a new version of Form 656-B, “Offer in Compromise Booklet,” and a revised Form 656, “Offer in Compromise.”

The new Form 656-B contains all of the forms and instructions necessary to file an offer in compromise. The revised Form 656 has been slimmed down to four pages and now only includes the four-page offer-in-compromise application. All of the worksheets, checklists and instructions previously found in Form 656 can now be found in Form 656-B. The availability of the two forms allows taxpayers and practitioners to access the offer-in-compromise application without printing or sorting through the offer booklet.

An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax liability. Under certain circumstances, the IRS has the authority to settle federal tax liabilities by accepting less than full payment.

Simply filling out the form is not enough! Your tax attorney must prepare a detailed narrative explaining the reason for the OIC. If you have a question, call Ronald J. Capppuccio, J.D., LL.M. (Tax) at 856 665-2121

Small tax-exempt organizations must file Form 990-N

2009-07-25T11:59:00.002-04:00

Small tax-exempt organizations must file Form 990-N

The IRS and the Treasury Department have issued final regulations clarifying how and when certain small tax-exempt organizations must file an annual electronic notice.

The final regulations finalize the temporary regulations without substantive change and affect small tax-exempt organizations whose annual gross receipts are not normally in excess of $25,000. They may be required to electronically submit Form 990-N, also known as the e-Postcard, unless they choose to file a complete Form 990 or Form 990-EZ.

The Pension Protection Act of 2006 added this filing requirement to ensure that the IRS and potential donors have current information about tax-exempt organizations.

The first e-Postcards were due in 2008 for tax years ending on or after Dec. 31, 2007. The e-Postcard is due every year by the 15th day of the 5th month after the close of the organization's tax year. For example, if the organization’s tax year ended on Dec. 31, 2007, the e-Postcard is due May 15, 2008. Organizations cannot file the e-Postcard until after their tax year ends.

House set to Raise Taxes to 45%

2009-07-11T14:27:00.003-04:00

House Democrats agreed yesterday to raise taxes on the wealthy to pay for more government control of the nation's health-care system, proposing a surtax that would send the top federal tax rate toward 45 percent.

The top federal tax rate currently stands at 35 percent, but Democrats have vowed to raise it to 39.6 percent next year, when cuts enacted during the Bush administration expire. Combined with other federal tax adjustments, the surtax could leave most taxpayers with annual incomes more than $350,000 facing top federal rates of at least 45 percent. There are additional increases in Medicare tax to apply to capital gains.

Democrats Increasing Taxes

2009-07-10T22:57:00.002-04:00

The Democrats controlling the House and Senate are lining up to support hefty tax increases in the midst of an economic downturn. Most increases under consideration would go into effect next year. Capital gains will have a "Medicare" tax. The top rate will exceed 40%. Higher income earners will face more penalizing tax increases. All of this will be done in the name of "health care reform."

Big Brother is Watching Small Business!

2009-07-04T12:16:00.003-04:00

The Senate conducted Hearings for "Transparancy" for corporations and LLCs. This means the Government wants to know everything about small business so it can tax and control every aspect. The Representative from the DOJ said that federal legislation must include four components:

(1) law enforcement must have access to the names and contact information for those who have control over a company and the company's assets;

(2) define "beneficial owner" the same across all 50 states and collect name, address and photo ID from ALL recognized as beneficial owner,

(3) obtain beneficial ownership information in an accurate and timely fashion which means it must be maintained on site in the state of formation, and it must be updated any time info changes and it must be certified annually, and

(4) there must be a federal enforcement component.

The purpose of this is to regulate and control every aspect of business by the government. This means setting-up a business will become more expensive and slower (like the months it takes to form a business in Europe.)

http://www.BusinessEsq.com

http://www.StartALLC.com

The CARD Act - New Rules for Credit Cards

2009-06-19T21:29:00.001-04:00

The CARD Act - New Rules for Credit Cards

The CARD Act, the Credit Card Accountability, Responsibility and Disclosure Act,signed into law on May 22, 2009, supposedly will provide increased consumers protection.Most of the changes go into effect after February 22, 2010. Already, many credit card issuers have increased rates, fees and have taken an immediate defensive posture. Probably, when CARD takes effect, the Banks will have worked around the so-called protections. Hopefully, not too many people will be shut out of credit cards.

Ronald J. Cappuccio, J.D., LL.M. (Tax)

The "Payer" in "Single Payer" Health Care!

2009-06-13T11:40:00.003-04:00

The "Payer" in "Single Payer" Health Care is you!

Congress hates telling the truth. Rather than calling government controlled and no choice healthcare the true term, "socialized Medicine,"

they call it "single payer." Remember, the payer is YOU, the taxpayer!

Cong. Rob Andrews (D--NJ), who by the way is not a bad guy and is really hard-working for his constituents, is holding Congressional

hearings as Chairman of the Healthcare Committee on the "single Payer" system. Watch out!

RJC

Pres. Obama - Tax Health Benefits

2009-06-06T01:00:00.002-04:00

President want to Tax Health Benefits

Reneging on his campaign promise, Pres. Obama announced he wants to tax employer provided health insurance benefits. This means the value of health benefits will be reduced for employees because they will have to pay tax on income they do not actually receive. ...More

US attacks US Business!

2009-05-27T20:18:00.003-04:00

Government Attacks US Multinational Companies!

The US government is searching for ways to grab money from US-based businesses. Even though most of the top US businesses are global, Pres. Obama and Congress want to tax money wherever earned. Businesses have reacted by moving more of their affairs overseas. With this new attack, expect more high level business and financial jobs to leave the US. ...More

Yearly House Prices Decline 19%

2009-05-26T21:22:00.002-04:00

House Prices keep Declining

The Case-Shiller Index of the housing industry showed a 19% year-over-year decline. The Case-Shiller report shows many regions have revisited 2002 prices. Some geographic areas are seeing prices going back to those in the year 2000.Real estate, on average, has declined by 32% from its second quarter 2006 highs. Some areas like Las Vegas and Phoenix, according to Case-Shiller, are off more than 50%!

Mortgage Loan Modifications

2009-05-25T23:01:00.001-04:00

Mortgage Loan Modifications

Are you getting threatened with a potential mortgage foreclosure? Having your attorney negotiate a loan modification can help change some the terms of your mortgage. For example, a lowered interest rate may make your monthly payment more affordable to help avoid foreclosure. Sometimes, past due payments can be rolled into the package to keep you current....More

Business Capital Expenses -2009

2009-05-25T19:11:00.001-04:00

Business Capital Expenses -2009

Many clients are weighing the advantages of buying a piece of equipment in this tight economy. As tax lawyer, I can develop a cost-benefit analysis to compare purchasing versus leasing the equipment and help determine whether the after-tax expenditure is likely to be worthwhile given the projected additional business the equipment would bring. ...More

Time to Buy a Business

2009-05-24T16:38:00.002-04:00

Bad Economy = Good Time to Buy a Business!

The current depression/recession is has been a disaster for many businesses. Companies, both large and small, are unloading assets and cutting staff. This may be the perfect time to start or expand a business to take advantage of some good opportunities. Acquiring a struggling rival business, hiring talented experienced people and growing your market share. A business resources can focus on opportunities like these to improve its competitive position at fire-sale prices. Click here

Credit Card Payments Reported to IRS

2009-05-15T03:18:00.000-04:00

Payment Card Reporting.

Under new Code Section 6050W, a business client who accepts payment cards will receive annual statements from the banks or other organizations issuing the cards showing the gross amount of card payments made to the client. The bank or other organization will also have to report the payments to the IRS.

While the new payment card reporting requirement will not apply until 2011, a new notice from the IRS reveals some of the issues the IRS is grappling with in implementing the new rule. For example, while the law and committee reports make it clear that the new reporting rule will apply to both credit and debit cards as well as payment through third party networks such as PayPal, the IRS indicates that it is weighing how to interpret the exact definition and scope of "payment card."

The IRS is also considering whether the current Form 1099 should be used for credit card payment reporting and, if so, whether the timing of such reports should conform to the current information reporting schedule. In addition, the IRS will need to determine whether reportable payments should be reduced by discounts, fees, refunds or other amounts, as well as how to administer the system to avoid double reporting [Notice 2009-19].

14% Decline in Home Prices!

2009-05-14T09:50:00.002-04:00

14% Decline in Home Prices!

The National Association of Realtors reported median home prices fell 14% year over year. This is a cumulative 26% decline from the peak in the third quarter of 2005. It has been nearly three-and-a-half years since the 2005 peak in prices. Are we finally close to a bottom in price declines?

Tax Exempts must file 990-N

2009-05-11T20:45:00.001-04:00

Tax Exempts must file 990-N

The IRS requires many small tax-exempt organizations to file their annual electronic informational return with the IRS by the May 15 deadline.This is the second year of the new requirement for tax-exempt organizations whose gross annual receipts are normally $25,000 or less to file Form 990-N also known as e-Postcards.

The May 15 deadline applies to all small organizations whose tax year ends on Dec. 31. Organizations whose tax year is different from the calendar year must file the e-Postcard by the 15th day of the 5th month after the close of their tax year.

Pres. Obama Attacks Businesses

2009-05-04T14:55:00.002-04:00

Pres. Obama Attacks Businesses

Fulfilling his campaign promise to increase taxes on US multinationals, Pres. Obama Attacks Businesses. His goal is to hamper US businesses by taxing income earned in foreign countries as if it were earned in the US. "If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," Obama overtly threatened Banks and businesses. Even though this creates even greater incentives for businesses to leave the US, Obama is pretending to "do something."

What a disaster!

Obama Administration Attacks Small Business

2009-04-26T19:34:00.003-04:00

Obama Administration Attacks Small Business

The Obama Administration's new Labor Secretary, Hilda Solis, screamed to Union workers "You can rest assured that there is a new sheriff in town." Solis proclaimed at a recent AFL-CIO conference that she is going to radically step-up enforcement of the anti-employer wage and hour laws. Even though the Bush Administration started a record number of Fair Labor Standards Act (FLSA) claims over the past few years and jaw-dropping wage and hour settlements (the average hovering around $24M), Solis is set to hire 250 new wage and hour field investigators. Further, President Obama hopes to increase the Depart of Labor funding for 2010 by $600M. In short, the government is pushing for a major overhaul of wage and hour law enforcement to attack more small businesses.

The government declared more than 70% of employers are estimated to be routinely violating wage and hour laws. Businesses should call their lawyers now to make sure they are prepared for an audit.

Taxes are Killing the Economy

2009-04-26T13:23:00.003-04:00

Taxes are Killing the Economy

The Stock Market has rallied since March 10. Is this a short term improvement in a Bear Market? Unless we see some positive progress in the real economy, the stock market cannot sustain the upward movement. The economy is lousy with construction at a low and many small businesses recording their worst year ever in 2008 continuing into 2009. One major reason the economy remains stalled is taxes are rising rapidly in individual states and the federal government to support government spending like drunken sailors. Amid all of the bailouts, the backstops, the guarantees, and the ongoing promises of aid, we are seeing a dramatic decline in federal and state government revenue (because of the bad economy). It is just worrisome to see more and more promises from the government against the backdrop of such a weakening economy! When will people learn that if you tax something you get less of it and if you subsidize something you get more of it? Let's stop more taxes on income and growth and let's stop subsidizing problem banks!

IRS Increases Small Business Audits

2009-04-25T20:37:00.001-04:00

Smaller companies were audited 41 percent more often in 2007 than in 2005, and companies with $10 million to $50 million in assets were 29 percent more likely to be audited in 2007 than 2005, according to a study by Syracuse University's Transactional Records Access Clearing House. Meanwhile, the TRAC study showed that companies with more than $250 million in assets were nearly 40 percent less likely to be audited than in previous years. Click Here for the full article.

Supreme Court Limits Police

2009-04-22T09:32:00.001-04:00

Supreme Court Limits Police

[4/21/09 – 10:14] In a 5-4 decision this morning, the United States Supreme Court announced a major change to the law related to the search of a motor vehicle following the arrest of a recent occupant. In Arizona v. Gant, the Justices ruled that police may search a motor vehicle following the arrest of a recent occupant only if the arrestee is unsecured and within reaching distance of the passenger compartment at the time of the search. The Court also ruled that a search for evidence inside the vehicle following an arrest will be considered constitutionally valid only when it is reasonable for the police to believe that evidence relevant to the offense triggering the arrest might be found within the vehicle.
The facts in Gant involve a driver who was stopped by the police and arrested for driving on the revoked list. The police removed him from the vehicle, and secured him inside of a police car. The police then conducted a search of the vehicle incident to the arrest and located a controlled, dangerous substance.
In analyzing the facts, the Court found that since the defendant had been removed and secured in a police car in handcuffs, he had no possibility of grabbing any type of weapon from the vehicle. Moreover, the police could not reasonably locate any evidence related to the offense of driving on the revoked list by searching the vehicle.

Net Operating Loss Carryovers for Individuals

2009-04-10T23:56:00.004-04:00

Net Operating Loss Carryovers for Individuals

The American Recovery and Reinvestment Act of 2009 (ARRA) provides individual taxpayers potential net operating loss (NOL) deductions. The IRS has provided opinions stating the ARRA applies to individuals. An “Eligible Small Business” can elect to carry back a 2008 NOL for up to five years. The IRS has broadly interpreted the definition of such businesses. Call Ronald J. Cappuccio, J.D., LL.M.(Tax) at (856) 665-2121 if you need some guidance on the NOL changes.

Freedom for All Americans

2009-04-09T09:48:00.001-04:00

Freedom for All Americans

On this day in 1866, the Republican-majority 39th Congress overrode a veto by the Democrat president, Andrew Johnson, to enact the 1866 Civil Rights Act. Every Democrat in Congress voted against it.

The purpose of the 1866 Civil Rights Act was to defend African-Americans from their Democrat oppressors in the post-Civil War South. There, Democrats had enacted black codes to impose near-slavery on African-Americans who had just been emancipated by the Republican Party's 13th Amendment.

Senator Lyman Trumbull (R-IL) wrote the 1866 Civil Rights Act, which conferred U.S. citizenship on former slaves and other African-Americans. The law guaranteed African-Americans "full and equal benefit of all laws and proceedings for the security of person and property, as is enjoyed by white citizens." Republicans thereby granted African-Americans the right to own property, engage in business, sign contracts and file lawsuits.

This was the first time that Congress overrode a veto of a significant bill. Also, the 1866 Civil Rights Act contradicted the notorious Dred Scott decision, in which the seven Democrat Justices on the Supreme Court had decreed that black people did not have constitutional rights. To prevent Democrats from someday repealing the Act, Republicans later enshrined its provisions as Article I of the 14th Amendment.

Sadly, Democrats defied the 1866 Civil Rights Act and other Republican reforms. Democrat oppression of African-Americans would not be overcome until the 1960's civil rights movement.

Foreign Bank Accounts= Money Laundering????

2009-04-07T14:26:00.003-04:00

Congress Wants to Criminalize Tax Accounts

Not satisfied with the draconian civil tax penalties for having an unreported foreign bank account, Congress is trying to make Foreign Tax Crimes a Money Laundering Offense - (subsec. 2(g) of the Fraud Enforcement and Recovery Act of 2009) (S. 386). This means if a US citizen does not reveal a foreign account it could be subject to an expensive prosecution and 20 years in Federal Prison!

Offshore Accounts Get Hammered!

2009-04-06T13:39:00.001-04:00

Offshore Accounts Get Hammered!

The IRS is starting to prosecute UBS customers with Swiss and Offshore accounts that have not reported them. On March 28, the IRS issued a directive making this a high priority.

If you are thinking of buying books or consulting services from someone that sells "Asset Protection" by using "secret" offshore accounts and bearer stock, check with your tax lawyer before your do anything!

IRS Form 990 Burdens NonProfits

2009-03-23T11:40:00.002-04:00

Filing the revised IRS form 990 is a big burden for Non Profits. Many non-profits are now being required to maintain more sophisticated records and to do complex tax compliance. I anticipate Nonprofits and Churches will be subject to heightened IRS scrutiny and IRS and State Tax audits. Click here for an interesting article.

IRS Increases Audit of Small Business

2009-03-06T20:20:00.002-05:00

From 2005 to 2007 the IRS increased audits of the smallest companies - those with assets under $10 million. Internal Revenue Service investigations increased a whopping 41 percent. This is part of the government's attack on small business by the IRS and other government regulators. See the full article.

Economic Stimulus Bill Hurt's Economy

2009-02-08T11:37:00.003-05:00

Economic Stimulus Bill Hurt's Economy

The Congressional Budget Office has reported the Economic Stimulus Bill pushed by Pres. Obama will actually hurt the US Economy and lower GDP in the long run:

Most of the budgetary effects of the Senate legislation would occur over the next few years. Even if the fiscal stimulus persisted, however, the short-run effects on output that operate by increasing demand for goods and services would eventually fade away. In the long run, the economy produces close to its potential output on average, and that potential level is determined by the stock of productive capital, the supply of labor, and productivity. Short-run stimulative policies can affect long-run output by influencing those three factors, although such effects would generally be smaller than the short-run impact of those policies on demand.

In contrast to its positive near-term macroeconomic effects, the Senate legislation would reduce output slightly in the long run, CBO estimates, as would other similar proposals. The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to “crowd out” private investment—thus reducing the stock of private capital and the long-term potential output of the economy.

The negative effect of crowding out could be offset somewhat by a positive long-term effect on the economy of some provisions—such as funding for infrastructure spending, education programs, and investment incentives, which might increase economic output in the long run. CBO estimated that such provisions account for roughly one-quarter of the legislation’s budgetary cost. Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. See Full Article

Once again, by taking "action" the President and Congress are hurting the American people with increased taxes and decreased income.

Obama's plan -Big Government, Big Spending, Big Taxes

2009-01-10T18:33:00.002-05:00

Instead of an immediate, permenant tax cut which would allow people to spend and invest their own hard earned money, President-elect Obama is proposing a massive increase in government expenditures (and ultimately taxes!) The Washington Post reports:

The package is expected to cost roughly $800 billion over two years. Obama has set ambitious goals for the plan, including a doubling in the production of alternative energy, modernizing 75 percent of the nation's federal buildings, making 2 million homes more energy-efficient, computerizing health records in five years and providing an immediate tax cut of up to $1,000 for most Americans.

Obama’s own expert report says:
Because it takes time to carry out new spending programs authorized by legislation, we expect the jobs created by spending on infrastructure, education, health, and energy to be concentrated in 2010 and 2011. At the other extreme are funds to protect the most vulnerable, which are generally spent promptly, and tax incentives for businesses to invest quickly. State fiscal relief and broad-based tax cuts fall in between: funds for these programs can be disbursed quickly, but there can be a delay before the main response of spending.

Government Investments are Spending our of your pocket!

2008-12-07T00:04:00.003-05:00

Today, President-elect Obama announced government "investments" on road and bridges and the like. What he means is he intends to spend, spend, spend and tax, tax, tax. "Investments" sound nice, but it takes money out of your hands (and your children, and their children's children...) and lets the politicians in DC tell you how best to live your life.

With Government "Help" expect a Worldwide Depression

2008-11-16T15:16:00.003-05:00

The Washignton Post reported on the International Economic Summit. The governments are "taking action" which means a government-induced economic disaster. If it is anything like the "help" of FDR's "New Deal" it will extend economic dislocations for far longer than a normal business cycle. Here are excerpts from the article:

[T]he gathering in Washington of the nearly two dozen nations -- from every region of the world -- reflected the new balance of power emerging in the aftermath of a financial crisis that has devastated even well-run economies, a wrenching process that British Prime Minister Gordon Brown has dubbed "the birth pangs of this new global order."

Under the plans outlined by the leaders, countries such as China, Brazil and India would gain greater roles and responsibilities as part of a restructuring of the international financial system, while European leaders won a commitment to new regulations and controls on banks, rating agencies and exotic financial securities. The leaders also agreed that a dramatic failure of market oversight in "some advanced countries" was among the root causes of the financial crisis, an implicit rebuke of the United States.

"I'm a free market person," President Bush told reporters after the summit ended, "until you're told that if you don't take decisive measures then it's conceivable that our country could go into a depression greater than the Great Depression."

2009 Inflation Adjustments Announced

2008-11-03T22:56:00.001-05:00

2009 Inflation Adjustments Announced
The IRS has released Revenue Procedure 2008-66 announcing increases in deductions, exemptions, limitations, and credits for 2009, as well as widened tax brackets. Key changes affecting 2009 returns include the following:

The value of each personal and dependency exemption increases to $3,650.
The new standard deduction is $11,400 for married couples filing a joint return, $5,700 for singles and married individuals filing separately, and $8,350 for head of household.
Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900.
The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028. The income limit for the credit for joint return filers with two or more children is $43,415.
The annual gift exclusion rises to $13,000, up from $12,000.

2009 Social Security Cost of Living Adjustments

2008-11-03T22:53:00.000-05:00

2009 Social Security Cost of Living Adjustments
Beginning January 1, 2009, the maximum earnings subject to social security tax withholding increases to $106,800. The earnings needed for one quarter of coverage is $1,090. The threshold for coverage for domestic employees increases to $1,700.

IRS Adjustments for Inflation

2008-10-20T21:29:00.003-04:00

The IRS announced the following inflation adjustments for 2009:

The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.
The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.
The annual gift exclusion rises to $13,000, up from $12,000 in 2008.

The entire announcement from the IRS

IRS Form 1042 - Report Payments to Foreign Businesses

2008-10-18T21:27:00.004-04:00

IRS Form 1042 - Report Payments to Foreign Businesses

Businesses paying U.S. source income ( including interest, dividends, rents, royalties, wages, fees) to any foreign company, foreign individual, foreign partnership, etc. (foreign persons”) must report the payments and the amount of U.S. tax, if any, that was withheld to the IRS on Forms 1042 and 1042-S.

The IRS is enforcing withholding compliance associated with Forms 1042 and 1042-S. The IRS will attack businesses failing to withhold the correct amount of U.S. taxes. For example, if a business withheld the wrong amount of U.S. tax from a payment it made to any foreign persons, the U.S. taxpayer will have to pay the tax due plus penalties and interest.

The IRS has shown its determination to intimidate taxpayers into compliance by releasing a new provision in its audit manual: IRM 4.10.21, "U.S. Withholding Agent Examinations -- Form 1042". This manual explains the procedures to be followed by the IRS during an examination of a U.S. withholding agent's Form 1042 filings. Since this audit procedure is now part of the IRS’ manual, you can expect questions from IRS agents about payments made to foreign persons and the tax that you withheld

IRS makes Non-Profit Initial Determinations Permanent

2008-09-08T20:17:00.003-04:00

The Internal Revenue Service has an onerous and expensive 2-step process for approval of exempt organizations. Because of the new IRS 990 annual filing requirement for non-profits, the IRS is changing the process. Instead of giving a 5-year preliminary approval requiring a review after 5 years to demonstrate the charity receives public support, the initial letter in now a final "Letter of Determination." This will eliminate the review but does not make up for the extra work of filing the 990,

IRS Takes $97,000 from Kentucky Town

2008-09-07T20:38:00.002-04:00

The IRS seized $97,000 from Raceland, Ky. The Mayor told a startled city council at an emergency meeting Wednesday night that the Internal Revenue Service has seized close to $100,000 from the city coffers because of non-payment of 2006-2007 taxes. This means the muncipal employees will lose their jobs and leaves the town in a precarious position for supplying fire and police services. Read more about this IRS attack.

New PIN Requirement for Tax Returns

2008-09-07T16:45:00.002-04:00

New PIN Requirement for 2009 Filing Season

Starting with the 2009 filing season, all 1040 taxpayers filing electronic returns must sign their returns using an electronic personal identification number (PIN). A taxpayer's electronic signature will include a five-digit PIN that they create and either their prior year adjusted gross income (AGI) or prior year PIN.

Interest Rates Increase for the Fourth Quarter 2008

2008-09-07T15:22:00.003-04:00

Interest Rates Increase for the Fourth Quarter 2008

The IRS announced that interest rates for the calendar quarter beginning October 1, 2008, will rise by a full percentage point. The interest rates are:
6 % for overpayments (5 percent in the case of a corporation);
6% for underpayments;
8% for large corporate underpayments; and
3.5% for the portion of a corporate overpayment exceeding $10,000.

Housing Price Drop May Be Worse than Great Depression

2008-09-04T20:43:00.003-04:00

Economist Robert Shiller (of the Case-Shiller Housing Index) announced his findings concerning housing price trends. He predicts the nationwide average price decline for homes will likely exceed the 30% decline that America experienced in the 1930's Great Depression. Since average price declines already are in the 20% range, the 30% benchmark is rapidly approaching. Some of the formerly "red-hot" markets are down 50% or more.

Worker Savings Accounts Proposed

2008-08-27T15:56:00.004-04:00

Rep. McHugh (R-NY) introduced the Worker Savings Account Act of 2008 on August 1, 2008. H.R. 6799 would create Unemployment Savings Accounts. These accounts would be treated like IRAs for tax purposes. Workers could contribute to these accounts to protect them during periods of unemployment other than following termination for gross misconduct.

Note if passed: This legislation would not lessen the requirement for employers to pay state or federal unemployment taxes, and would not reduce an individual’s unemployment benefits.

Employees would be limited to annual contributions of $5,000 (indexed to inflation) and employers could provide matching contributions up to the full amount of the employee’s contribution. The employe could rollover WSA funds into an IRA or 401(k) plan.

This Bill was referred to the House Committee on Ways and Means. Because this is an election year, the Bill will most likely die in the Ways and Means Committee.

1 Million Bankruptcies

2008-08-27T14:01:00.000-04:00

Nearly 1 million individuals and businesses filed bankruptcy in the 12 months ended June 30, according to U.S. Court data released August 27, 2008. There were 967,831 bankruptcy cases filed since July 1, 2007, up 28.9 percent from the prior 12 months, when cases totaled 751,056. Non-business filings made up 96.5 percent of those cases, but on the business side a total of 33,822 cases were filed in the 12-month period, including 23,372 under Chapter 7.

Housing Prices Fall 15.4%

2008-08-27T13:39:00.001-04:00

The Case-Shiller Home Price Index came out today, and it showed that home prices fell 15.4% in the second quarter nationwide, and this just puts more pressure on anyone falling behind in mortgage payments. A homeowner that has a loan worth more than their mortgage often finds it easier to just walk away from a home rather than sell it, so until we can see some price stabilization, the glut of homes on the market is likely to grow. Keep in mind that a lot of the adjustable loans are still set to adjust, so again, the pressure on prices will likely continue.

Note: Commercial Building prices seem much steadier. The problem I observe is not the Sales price being too low, but the Listing price of many properties being above market value.

IRS Increases Mileage Rate to 58.5 cents

2008-06-23T21:12:00.002-04:00

Due to rising gas prices, the IRS announced the mileage rate will increase by eight cents to 58.5 cents a mile for all business miles driven from July 1 through Dec. 31, 2008. The new rate for computing deductible medical or moving expenses will also increase by eight cents to 27 cents a mile. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile. Full Article.

Manufacturing and Construction down!

2008-06-02T19:52:00.001-04:00

Manufacturing and Construction down!

The Institute for Supply Management's manufacturing index for May showed its fourth straight monthly decline,. The Commerce Department reported construction spending dipped in April, for the sixth time in seven months, due to a drop in home building.

IRS Drops Interest Rates

2008-06-02T19:31:00.001-04:00

IRS Drops Interest Rates

The Internal Revenue Service announced June 2, 2008 that interest rates for the calendar quarter beginning July 1, 2008, will drop by one percentage point. The new rates will be:
five (5) percent for overpayments [four (4) percent in the case of a corporation];
five (5) percent for underpayments;
seven (7) percent for large corporate underpayments; and
two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.

Housing Market Disaster

2008-05-27T19:44:00.003-04:00

Remember all the experts reminding us the aggregate housing market had never declined since the Great Depression? That myth was shattered by today’s Case-Shiller 20-City Index showed a huge 14.4% decline in the March 2008 compared with March, 2007 prices. This is average of the 20 cities. Las Vegas was down nearly 26%. This was the biggest decline in the index has seen since it was started in 1988. Other areas not in the index, such as shore and vacation properties show an even bigger decline.

Foreclosures still Increasing

2008-04-15T20:55:00.002-04:00

Increasing Foreclosure Rates

Foreclosures were up 57% from March of last year. Approximately 1 in 538 houses in the U.S. are in foreclosure. Nevada has the worst rate with 1 in 139 homes in foreclosure. California has a 1 in 204 foreclosure rate.Nevertheless, since the bulk of the ARM loans were made in 2005 and 2006, the market is clearing out the problem loans through foreclosure, selling, or walking away.

IRS Increasing Audits!

2008-03-31T21:09:00.001-04:00

IRS is Increasing Audit Rates

The IRS is greatly increasing the rate of tax audits on higher income taxpayers and businesses. The audit rate started dropping in 1998 because of restructuring at the IRS. It bottomed in 2000, when just 0.5 percent of individual tax returns were audited but doubled that rate by 2007, to 1 percent.

Audits of the Wealthy. Audits of those who make more than $1 million a year jumped 84 percent from fiscal 2006 to 2007, according to IRS figures. Those taxpayers have a 9 percent likelihood of being audited. That's nine times as much as the average taxpayer.

Small Business Audits. But when it comes to businesses, the IRS is stepping up audits on smaller and mid-sized firms. The IRS targets sole proprietorships that report income on Schedule C with a 6 percent chance of getting audited.

"We have increased our focus on mid-market corporations - those with assets between $10 million and $50 million," the IRS said in a statement.

Watch out for Tax Scam Preparers

2008-03-17T19:50:00.002-04:00

IRS Warns of Scams by Tax Return Preparers!

The IRS Reports:
"Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes. These scam artists make their money by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote the filing of fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. Taxpayers should choose carefully when hiring a tax preparer, especially one who promises something that seems too good to be true."

If you have any questions about promises by a tax return preparer, call Ronald J. Cappuccio, J.D., LL.M. (Tax) at (856)665-2121.

NJ Government at the Bottom

2008-03-04T11:25:00.002-05:00

New Jersey Government at the Bottom

The Pew Center reports that New Jersey has an extremely poorly run government. Except for Rhode Island and New Hampshire, New Jersey government scored among the worst in the US. That is no surprise to taxpayers who have suffered years of high tax and wasteful spending big government.

Housing Sales Drop 13%

2008-01-25T09:43:00.000-05:00

Housing Sales Drop 13%

House Sales for 2007 fell 13%, to mark its biggest yearly decline in 25 years. Also, median prices FELL by 1.8% nationwide. That was the first national decline in the 40 years that home sales have been tracked! Many economists say that the last time prices fell like that would likely have been in the years that followed the Great Depression in the 1930s.

Ron Paul - Courier Post Letter

2008-01-08T16:52:00.000-05:00

The Courier Post published my commentary about Ron Paul:

Saturday, January 5, 2008

Re: "Republican Ron Paul offers a different choice and new ideas" (Perspectives, Dec. 28).

U.S. Rep. Ron Paul, R-Texas, is the only candidate running who actually represents the America of our founding fathers. He promotes more individual choice, the right for you to control your life, not the government controlling you and taxing you into penury.

Let's stop the "yes, but" Republicans and the "tax-and-spend" Democrats from overriding the Constitution in the name of "patriotism" or some favored social program. Paul represents a new freedom for all Americans from an overbearing federal government.

That is why I am voting for Ron Paul in the Republican Primary. Thank you.

RONALD J. CAPPUCCIO

Cherry Hill

Click Here for the full article.

Lottery Winners Lose!

2008-01-07T11:05:00.000-05:00

Lottery Winners Lose!

The 11th U.S. Circuit Court of Appeals in Atlanta ruled Dec. 19 that Bertucci and the others around the country who sold their winnings to investment companies must pay income taxes on the lump sum they received instead of lower capital gains taxes. Click Here for more details.

Congress Raises Tax Penalties

2008-01-06T20:10:00.000-05:00

Congress passed a new law increasing nuisance penalties against businessees:

Failure to File Partnership Returns Will Be More Costly. The new law extends the period for charging the monthly partnership return failure-to-file-penalty from 5 to 12 months and increases the monthly per-partner penalty from $50 to $85. This change applies to partnership tax returns due after December 20, 2007. (Another unrelated new law increases this monthly penalty $1 to $86 per partner.)

Failure to File S Corporation Returns Will Also Be More Expensive. The new law imposes a monthly penalty for failing to file an S corporation return or failing to provide information required to be shown on the return. The penalty amount is $85 per shareholder per month up to a maximum of 12 months. This change applies to S corporation tax returns due after December 20, 2007.

Crazy California Tax for LLC's

2007-12-27T20:57:00.000-05:00

Everything is taxable in California. The California Franchise Tax Board (FTB) takes a very agressive position on when a LLC needs to be registered in California. Their view is if a member of the LLC makes one decision for the LLC, writes or signs one check for the LLC, makes one phone call regarding the LLC and anything else you can think of while that members is in California then that LLC has to be registered in California and file LLC tax returns with California. That is a totally ridiculous position. Next, they will try to tax business owners as they fly over the state!

This is all part of the "Nexus" fight where States tax out of state businesses.

New Jersey Ends Death Penalty!

2007-12-14T09:23:00.000-05:00

New Jersey Ends Death Penalty!

The State of New Jersey Assembly and Senate approved the abolition of the Death Penalty on December 13, 2007. The Governor promises to sign it into law. It's about time!

Ron Cappuccio

Ron Paul Video

2007-12-13T09:07:00.000-05:00

Here is a video of Ron Paul Summarizing some of his positions:

Click Here...

Remember to Contribute to Dr. Paul's Campaign onm December 16, 2007

Click Here...

Why I Support Ron Paul for President

2007-12-12T17:14:00.000-05:00

Why I Support Ron Paul for President

Taxes
First, Ron Paul is the only limited government, lower taxes candidate. He has never voted to increase taxes and desires to cut government spending and taxes needed to support the spending. You cannot increase government (whether it is "infrastructure" as used by the Big Spenders, or transfer payments and subsidies,) and expect to lower taxes.

Free Trade
Ron Paul supports real free trade not more governmental organizations such as NAFTA, GATT, CAFTA, etc. Free trade is simple... we won't tax imports and other countries do not tax our exports.

War and Foriegn Policy
The war in Iraq was sold to us with false information. The area is more dangerous now than when we entered it. We destroyed a regime hated by our direct enemies, the jihadists, and created thousands of new recruits for them. We have no business making "regime changes" and trying to knock down or prop up other governments. We are not and can never be the policemen of the world.

Personal Liberty
The biggest threat to personal liberty is the government. We must limit the ability of the government to collect and store data about citizens' personal matters. Every government agency restricts individual choice. We need to cut back on government and increase personal freedom. The Constitution has a very limited role for the Federal government. Washington has no business being involved with education, abortion, religion, race relations, housing, etc. These are the rights left to the individuals and the states.

Yes, Ron Paul CAN WIN
The so-called "practical" political commentators say that Ron Paul can't win so we should unite behind a "winner" even if we do not support their views. This is the old "unite for unity" trap and is akin to Machiavelli's "the end justifies the means" argument. Let's vote for the best person...Ron Paul for President in 2008!

Ronald J. Cappuccio

Click Here to contribute to Ron Paul's Campaign

Mortgage Delinquency Rates Rise

2007-12-10T20:24:00.000-05:00

Mortgage Delinquency Rates Rise

The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 5.59 percent of all loans outstanding in the third quarter of 2007 on a seasonally adjusted (SA) basis, up 47 basis points from the second quarter of 2007, and up 92 basis points from one year ago, according to MBA's National Delinquency Survey.
For Full Article...

Family Businesses Unprepared for Succession

2007-12-03T10:06:00.000-05:00

Family Businesses Unprepared for Succession

A new survey showed Family Business need to prepare for continuation by the next generation. Among the survey's other key findings:

25 percent of the businesses think the next generation is not competent to move into leadership roles.

92.6 percent say the family business is their primary source of income.

60 percent of majority shareholders in family businesses are age 55or older.

Without planning, many of these businesses will fail or greatly diminish in value leaving the owners far less than they deserve. The full article is at the Orlando Business Journal

If you have a question, call me at (856) 665-2121

Ron Cappuccio

IRS Increases Collection Activity

2007-11-30T10:10:00.000-05:00

The IRS has started a big push to collect money. Bank Levies and Wage Executions are up. There is also an attack against late filers. One client who is late filing a 941 for the third quarter (due Oct 31) has already received an IRS assessment based upon inflated figures. If that happens to your business, you have only 30 day from the DATE OF THE ASSESSMENT to file the actual return.

If the IRS knocks on you door, get the card of the person, but give no information other than referring them to Ronald J. Cappuccio at (856) 665-2121. DO NOT LET THEM INTO YOUR HOME OR BUSINESS!

For more information on Confronting the IRS, click here...

New Rules for Cafeteria Plans

2007-10-27T10:20:00.000-04:00

The "Section 125 cafeteria plan" has become a popular way to offer fringe benefits in the workplace on a pre-tax basis. Essentially, an employee is able to pick and choose the benefits desired. The employer only has to pay for those benefits that the employee actually chooses. Both parties save on taxes so it's usually a win-win situation. The IRS recently issued new guidance for companies with these plans, which clarifies many issues.

Click Here for the full story.

In the Wake of the Sub-Prime

2007-09-22T20:09:00.001-04:00

In the Wake of the Sub-Prime
Meltdown: A Brave New World

Commercial real estate owners-and homeowners-are justifiably concerned about the condition of the mortgage industry. The myriad of news stories about the sub-prime mortgage debacle and the ensuing financial crisis beg the following questions: How did we get here? What's

Mortgage and Rate Primer

The mortgage and lending industries contain principal elements that often move in tandem with each other. Below is a glossary explaining some of the terms:
Discount Rate - The interest rate charged by the Federal Reserve for short-term loans to member banks. The Fed can raise or lower this rate.
Federal Funds Rate - The interest rate banks charge each other for the use of Federal Funds (funds deposited by commercial banks at Federal Reserve Banks). It changes daily and is a sensitive indicator of general interest rate trends. The Fed can also raise or lower this rate.
Prime Lending Rate - The lending rate banks charge creditworthy institutions. It is generally set by banks according to the Fed Funds Rate.
Treasury Bill Index - One of the common indices ARMs are tied to. A mortgage may link to Treasury maturity rates of 1, 2, 3, 5, 7, or 10 years.
Federal Cost of Funds Index - Another of the indices ARMs are tied to. The Federal Cost of Funds Index is calculated as the sum of the monthly average interest rates for marketable Treasury bills and marketable Treasury notes, divided by two, and rounded to three decimal places.
Certificates of Deposit Index - Another of the common indices ARMs are tied to. This index is the 12 month average of the monthly average yields of three-month certificates of deposit. (It is calculated by averaging the previous 12 rates of the 3 month CD rate.)
Eleventh District Cost of Funds Index - Another of the indices ARMs are tied to. The 11th District represents the savings institutions headquartered in Arizona, California and Nevada. The cost of funds reflects the interest paid for savings accounts, money borrowed from commercial banks, and other sources. The 11th District Cost of Funds index is used primarily for ARMs with monthly interest rate adjustments.
London Interbank Offer Rate or LIBOR Index - One of the other common indices ARMs are tied to. While some LIBOR rates link to the value set by the British Bankers Association (BBA), most are tied to a monthly LIBOR released by Fannie Mae. The Fannie Mae LIBOR uses the same sources as the BBA but is ultimately calculated differently. If your ARM links to the LIBOR, find out which of these values the mortgage links to.

ahead for the mortgage market? Is there a light at the end of the tunnel? And what are my options as a mortgage holder or seeker?

Current Environment: How Did We Get Here?

In the early 2000s, in the midst of a housing boom, lenders felt more confident about providing mortgages to customers whose poor credit histories prevented them from buying homes in the past. These sub-prime mortgages required little documentation-so borrowers offered scant verification that they could repay the loans. Sub-prime mortgages were then packaged and sold to secondary and tertiary markets-as mortgage-backed securities, asset backed securities, collateralized debt obligations and collateralized mortgage obligation investment instruments.

When mortgage holders began to default on their loans, not only was a credit crunch created among lenders, investors also began to sell off securities purchased in the secondary and tertiary markets. This negatively impacted mortgage lenders even further. And the increasing instability of the mortgage industry has led to continuing uncertainty and periodic panics in the financial markets creating a vicious circle that has become a full blown financial crisis.

Is There Light at the End of the Tunnel?

On August 17th, the Federal Reserve Board dropped the discount rate on short-term loans and also extended the repayment period to ease pressures in the banking and lending system. The Fed may further lower the discount rate in the future to continue providing liquidity relief and may also lower the funds rate at the September 18th Federal Open Market Committee meeting or before. That would trigger potentially lower interest rates for a variety of borrowers. When the Fed lowers the fed funds rate, banks tend to lower the prime-lending rate thus easing credit in the mortgage industry.

The ultimate solution is that mortgage lenders will have to move toward quality. Similar to venture capital funds that overextended themselves by investing in unviable Internet businesses in the late 1990s, the mortgage industry will have to restructure and focus on value. There has been irrational exuberance in the mortgage market and the bubble has burst but the industry will rebuild in time and be stronger and more reliable.

What's Ahead for the Mortgage Market?

Until that restructuring happens in the industry, however, things will get worse before they get better. This is due to the fact that over the next year or so, millions of Adjustable Rate Mortgages (ARMs) will reset from initially low teaser payments to higher rates. People with equity in their real estate may have the option of refinancing to an ARM with different terms or a fixed rate mortgage. However, real estate owners with negative equity in their property have dramatically fewer options.

This is particularly true for ARM holders who purchased their properties in the last couple of years. These owners may find themselves between a rock and a hard place when it comes to the quandary of negative equity. Property equity is determined by the current market value of the real estate (established through appraisal) less what is owed on the existing mortgage.

Most real estate owners have lost equity due to the slump in the housing market. And those who signed ARM contracts in the past couple of years have paid little of the existing mortgage due to initially low payments. This double whammy, so to speak, compounds their negative equity problems.

Now that the mortgage industry has become more risk averse, the higher the negative equity on a property, the more difficult the challenge of refinancing becomes. Borrowers who can't meet the higher ARM reset payments and those that can't refinance may face foreclosure.

Differences Between Fixed and Adjustable Rate Loans

What are ARMs and why are they contributing to the mortgage meltdown? ARMs were introduced into the mortgage market in the 1970s. They have become rampant over the past several years and are one of the foundational tools upon which the sub-prime mortgage market was built. Here are the crucial differences between ARMs and more traditional fixed rate mortgages:

ARM payments tend to be initially fixed and low then usually increase or decrease periodically based upon shifts in interest rates. With a 3-year ARM, for example, the payment is fixed for three years and then reset to a fluctuating rate. After the adjustment period, some ARMs shift as often as every month, although some adjust only once every year.
Adjustment rates on ARMs are tied to an underlying index or benchmark. Common indices that ARMs link to include: Treasury Bills, Certificates of Deposit, Eleventh District Cost of Funds, Federal Cost of Funds and the LIBOR. In addition to the index rate, many ARM contracts have a margin stipulation. The margin requires the holder of the mortgage to pay a rate that is a specified percentage higher than the adjustment index. An ARM tied to the LIBOR, for example, may have payments of LIBOR + 1 percent where the LIBOR is the adjustment index and the 1 percent is the margin.
Fixed Rate Mortgages, in contrast, are predictable in nature. Payments are linked to the interest rate at the time of the contract and are unaffected by economic shifts. Fixed rate mortgages are paid off in varying time periods, commonly 15, 20 and 30 years.

Tips for Mortgage Holders and Seekers

What are your options in the current environment? Here are three ideas to consider:

1. If you have an ARM, think about switching to a fixed rate mortgage in these uncertain times. Get an appraisal of your home to determine the equity value as a first step.

2. Weigh the pros and cons of investing in a high-price property under present conditions. Although it is a buyer's market in terms of value, a jumbo mortgage is required for any amount above $417,000 and, in the current environment, interest rates on jumbo loans are volatile and escalating.

3. Examine your current mortgage contract and future loan agreements carefully. If you have an ARM or are considering one, know the underlying index your rate is tied to, when the mortgage will reset or shift to adjustable payments and what the margin is. Also, be aware that many loans contain a "due on sale" clause, which enables the lender to demand full payment if the borrower sells the mortgaged property.

Husband and Wife Partnership Election to be Treated as Sole Proprietors

2007-08-26T21:34:00.000-04:00

Husband and Wife Partnership Election to be Treated as Sole Proprietors

Under the Act, a husband and wife that report their joint business activities on their joint tax return may elect to be treated as sole proprietors and not as a partnership. Although some commentators believe this provision will be used infrequently, this will have a tremendous impact on Husband/Wife owned Limited Liability Companies. Because there were two owners, the LLC would have to file a 1065 US Partnership Tax Return. This makes no sense for a couple filing a joint return. So long as both the husband and wife materially participate in the business and the business, a Schedule C may be filed. This will save unnecessary accounting expense. If only one spouse materially participates in the business even though both spouses own the business, they will not qualify for this election. Also, the LLC must be a trade or business, not merely an investment to qualify.

Housing "Bust" Gets Worse.

2007-08-23T20:48:00.000-04:00

Housing "Bust" Gets Worse

The housing boom is long gone. In NJ, the housing boom ended in the Summer of 2005, and since 2006 the housing market has been crashing. New home builders are trying to unload excess inventory by cutting prices and offering incentives. The National Association of Home Builders reported builder confidence sank by two points to 22 which is the lowest reading since January 1991. The US Commerce Department reports new home construction rapidly declined 6.1% in July to a seasonally adjusted annual rate of 1.38 million which is down 20.9% over the past year.

On top of the housing decline, the tightening credit standards is making it harder for homeowners with adjustable rates to refinance and avoid skyrocketing payments. This does not look good for the construction industry and the economy in general.

Shulz' phoney Tax Scams Stopped

2007-08-14T20:29:00.000-04:00

A New York Court permanently stopped Robert L. Schulz and his two groups, We the People Foundation for Constitutional Education Inc. and We the People Congress, from selling materials by mail, over the Internet or in person that falsely claim citizens do not have an obligation to pay federal income taxes. The phoney materials mislead people into believing they can opt-out of filing W-4 withholding forms. The scheme is to prevent withholding. The Court determined "Defendants' materials are intended to cause employees to believe that they need not pay an income tax and employers to believe that they need not withhold taxes from employees' wages or pay matching amounts."

Part of Schulz' program is "Operation Stop Withholding." Watch out for anyone that claims you simply do not have to file or pay taxes.