Passport Revocation for Certain Delinquent Taxpayers

Published On: April 3rd, 2017

Well, whether it’s a good idea or a bad idea, the Internal Revenue Service now has the power to cause passport non-renewal or revocation for certain taxpayers with balances above $50,000, under I.R.C. §7435.  The IRS website has a page devoted to the issue. I have noticed that the IRS notices are starting to carry verbiage about passport revocation.

Happy Emancipation Day

Published On: April 8th, 2016

The extra weekend for filing this year is due to Emancipation Day, April 15, which is a holiday in the District of Columbia.

One of the quainter quirks of the Internal Revenue Code is that a filing that is due by a particular date, if that particular date is a Saturday, Sunday, or holiday in the District of Columbia, is due the first succeeding day that is not a Saturday, Sunday, or holiday in the District of Columbia.  I.R.C. 7503.  Winkler v. Commissioner, 56 T.C. 844 (1971).

MN Commissioner’s Orders

Published On: November 13th, 2015

Another client recently first became aware of a MN tax debt through a collection notice – the client never received the original Commissioner’s Order.  MN practice is to send out the Commissioner’s Order through ordinary first-class mail, not certified mail.  On the IRS side, the analogous Notice of Deficiency, or the Final Notice of Intent to Levy, are sent certified mail.

Given the importance of the Commissioner’s Order – failure to appeal within 60 days generally precludes the taxpayer from any pre-payment challenge – MN should send the Commissioner’s Order certified mail.  It would provide proof of receipt/non-receipt, and would also put the receiver on notice that something important has been sent.

Minnesota Income Tax Brackets Adjusted for 2016 and other Tax Changes

Published On: November 13th, 2015

From the internet

The Minnesota Department of Revenue has announced that they have adjusted the individual income tax brackets for the 2016 tax year. The change will be .45 percent compared to the 2015 tax year. This is an adjustment that occurs every year, but for the 2016 tax year, the adjustment will keep tax payers from having to pay higher taxes because of inflationary income changes.

It is required by law that states index for individual income inflation. An inflation factor is used to adjust the brackets each year, rounding it to the nearest $10, based on the U.S Consumer Price Index. What doesn’t change is each tax bracket’s tax rate.

In addition to the income tax bracket adjustment, Minnesota has repealed the two percent income tax withholding for self-employed workers that are hired for construction projects.

A recent change in the law ended the previous requirement that construction companies withhold two percent state income tax on independent contractors. These workers included plumbers, electricians, and carpenters hired by construction companies to help them complete specific tasks.

Independent contractors are required to report their income and pay taxes on that income like anyone else who earns money. However, independent contractors in Minnesota can request that state income tax be withheld from their earnings. This is called “voluntary withholding,” but isn’t required.

The Minnesota Department of Revenue is updating the Withholding Tax return to reflect the change.

It is important to note that the change doesn’t apply to construction company employees, as they are not considered independent contractors. They are still subject to regular tax withholding by their employers.

Lastly, the Department of Revenue is reminding qualified veterans with disabilities that own their homes to claim the homestead benefit that is designed just for them. This presents another tax saving opportunity for those who have served the country.

St. Paul Keeps Buildings Standing Through Historic Tax Credit

Published On: August 25th, 2015

From the internet

St. Paul has some very beautiful old buildings standing throughout. These buildings are part of a very important history and that is why historic rehab is so important.

Now another historic building is going to receive a much needed rehab in an effort to preserve the historical significance of St. Paul. It is the upper post of Fort Snelling and it is expected to receive $70 million in funding, which is two-thirds of the projected total cost of the rehabilitation.

This is certainly a start thanks to a new state law that allows the money to go to for-profit developers rather than municipalities or non-profits.

It is called the Historic Tax Credit Program and it has so far awarded almost $120 million to private developers to rehabilitate historic buildings that they say they probably wouldn’t have touched without the funding.

The reason why developers can be hesitant to touch an old building is because the buildings are old and there are a lot of risks. Additional safeguards and preservation methods have to be put in place by developers and that means that more money is needed to do the job. It can be difficult for a non-profit to do the job, as many non-profits rely on volunteers to bring projects to completion. Many volunteers have their own companies to other jobs. For-profit developers can bid on a project for the exact cost and get the job done in a timely manner because that is their job.

This tax credit doesn’t require any sort of signoff from the legislature and doesn’t require the governor to approve its use. Instead, the Minnesota Historical Society and the Department of Revenue reviews the applications. The money used in the project comes from the general fund and there is no yearly cap.

Those in favor of the tax credit say that the law was needed to preserve properties that wouldn’t have gotten off the ground if they relied solely on private investment. The dollar amounts for rehabilitation are too high for private investment. Some of the projects exceed $100 million to complete.

It is also important to note that properties can be very expensive demolish, especially older ones that may still have asbestos in them. It can be quite cost-effective to preserve a property instead of demolish it, especially when that property is able to be used after its rehabilitation. It becomes a useful and productive piece of property.

One of the reasons for the program was that the construction industry needed some help. The housing bust caused many issues and the program was a way to try and give the boost that was needed. It was an effort that took 11 years to come to fruition. The efforts then led to the first round of grants and credits being awarded in 2012.