Passport Revocation for Certain Delinquent Taxpayers

Monday, 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

Friday, 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

Friday, 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.

Proposed Tax Breaks for Minnesota Businesses and Farmers

Thursday, April 30th, 2015

From the internet

The Minnesota GOP has proposed business income tax breaks that could also benefit farmers. Their goal is to provide these taxpayers with over $2 billion in relief, which includes a personal exemption for every filer that they could claim for just two years.

The proposal by the GOP could be a difficult to achieve, as there are many Democrats that do not want more tax cuts after the state has achieved firm fiscal footing. The architects of the proposed tax breaks say that the state is going to possibly see a $1.8 billion surplus and they want to pass some of the money on to the people.

One Republican said it comes down to giving the people a choice about how they spend their money rather than possibly using the money for bigger government.

Some tax savings have been put in place, such as credits for education expenses, student loan paybacks, and elderly and childcare costs. A new $1,000 per person exemption has been proposed that would reduce the tax liabilities for every filer and that would cost the state $539 million. But the exemption would only last or two years and that would be it.

One representative said a family of four could see $500 in savings over a two year period just because of the personal exemption, although the exact amount would depend on earnings and what other relief they are able to claim.

Other tax breaks are smaller, but they do ramp up over time. For instance, a provision that would enable filers to subtract their social security income would be phased-in gradually until all of the money would be exempt in 2019. The cost to the state will be $379 million. This is great news for those that are and will be retiring.

For businesses, the plan would phase out the state tax on industrial and commercial property. It would take six years for this to occur, but businesses would receive an exemption on the first $500,000 in the first year. A similar plan could be in place for recreational property in which the first $250,000 would be exempt.

It is said that Democrats will make a smaller proposal that would cost the state less, but that there would still be property tax relief for business owners in that proposal.

One of the reasons why Democrats feel the plan needs to be redone is because they say people are receiving much less in state income tax breaks than businesses are under the current proposal.

Many questions have come about regarding these tax cuts, as individuals and businesses are curious to know how the cuts will affect them and how much their overall income taxes will be reduced in the future


Minnesota Lawmakers Considering Limits on Estate Taxes

Wednesday, April 29th, 2015

From the internet

For years, Minnesota has been touted as an expensive place to die due to its estate taxes and now lawmakers in Minnesota are considering reducing the amount of taxes that are owed when higher earning residents die.

The $2 billion tax cut package by Republicans that control the House would more than double the amount of money Minnesotans would have to make before estate taxes would have to be paid. Currently, the existing policy states that estate tax kicks in when an individual makes more than $1.4 million. This amount is slated to increase in 2018 and the tax rates range from 9 to 16 percent. This affects fewer than 3 percent of the estates in the state.

If the new House bill passes, the threshold would be raised from $1.4 million to $2 million in 2015. The additional annual adjustments would then set the 2018 taxable amount from the expected $2 million to $5 million or even higher. Future increases would occur with inflation. The $5 million minimum for estate taxes would also be accompanied by a flat tax of 16 percent.

One rep describes the state as being an expensive one to die in due to the fact that Minnesota’s estate tax exemption doesn’t match the federal tax code. It has been found that some people move to other states to protect their assets.

Democrats are critical of the Republican proposed tax cuts. Republicans argue that the money has already been taxed and that some states don’t implement an estate tax.

It is said that many small business owners and farmers would benefit from the law change and not just those who are considered “rich.”

All in all, however, not many Minnesotans are affected, but if a farmer wants to keep a farm in the family and the farm is worth a lot of money (more than it generates in income), the family doesn’t want to have to sell off part of the farm so that the money can be given to the government.

Researchers estimate that fewer than 700 estates would have to pay for the estate tax. That is down from the current number of 800. However, the Department of Revenue has estimated that the two-year cost to implement an estate tax exemption would cost nearly $200 million. This has some lawmakers arguing that that $200 million could be better spent on other programs rather than another tax break. They state that it is another tax break for wealthy people, creating an unnecessary burden on the state.

There are other lawmakers that have stated that estate planning can help individuals when they wish for their families to keep the estate intact and minimize the Minnesota estate tax obligation.

Regardless of those lawmakers that challenge a change, there is sentiment that the estate tax needs to be improved, but that the current proposal is flawed.

Governor Mark Dayton is proposing a minor technical estate tax change in relation to farm property that may be involved in eminent domain. The cost to the state for this change is very minimal, but helps farmers.