Tax News: November ’16 — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Tax News: November ’16

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Share and share alike. If you use an online platform to provide car rides, rent a spare room or furnish other goods or services, you’re involved in the so-called “sharing economy.” The IRS has posted valuable information about tax issues for these folks, as well as guidance for tax practitioners representing them, on its website. Visit https://www.irs.gov/businesses/small-businesses-self-employed/sharing-economy-tax-center.

Fast-forward NOLs. If you have a net operating loss (NOL), you generally carry it back two years before carrying it forward for up to 20 years. But you can elect to forgo the carryback and only carry the tax loss forward if you attach an election statement to your tax return. Unfortunately, a taxpayer in a recent decision failed to meet this basic requirement, so he had to carry the NOL back before carrying the remaining loss forward to future tax years. (Jasperson, CA- No. 16-10883, 8/31/16)

Tax payoff for lottery. Did you hit the jackpot in a state lottery? Congrats, but you still have to pay federal income tax on your winnings, and probably state income tax as well. Under a new law in Pennsylvania, retroactive to Jan. 1, 2016, cash prizes are now subject to a 3.07% tax. This leaves California as the last state in the union that doesn’t tax lottery prizes.

New bill unifies nation. The Mobile Workforce Tax Simplification Act (H.R. 2315), which passed the House on Sept. 22, is the latest stab by Congress at creating a uniform national system for taxing employees who temporarily conduct business in other states. Currently, states are permitted to impose withholding tax on individuals while they are working within their borders, even if the employee has traveled there for just one day. This leads to complications for employees and employers alike. Accordingly, H.R. 2315 ensures uniform requirements after a 30-day window expires. (Certain taxpayers, including professional athletes and entertainers, would not be protected.) However, previous measures addressing these issues have died on the vine. Prospects for enactment this year are still dim, but we will keep you posted.

Hackers go after tax pros. The IRS is warning tax practitioners about a new wave of cyberattacks (IRS Internal News Release 2016-119, 9/23/16), wherein criminals file fraudulent tax returns from remote locations by taking over the pros’ computers. To combat problems, the IRS recommends promptly reviewing computer settings and doing the following:

  • Run a security “deep scan” to search for viruses and malware
  • Strengthen passwords for computer and software access
  • Don’t click on links or open attachments from unknown senders
  • Educate staff members about phishing scams
  • Review any software that employees use remotely.

Finally, tax pros should consult the article “Data Theft Information for Tax Professionals” at www.irs.gov/individuals/data-theft-information-for-tax-profesionals for more information.

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