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Strategies for High-Income Taxpayers: Fight Back Against the IRS

October 4, 2023 by admin

Tuesday, October 3, 2023 – The Internal Revenue Service (IRS) has recently showcased a markedly antagonistic stance towards affluent taxpayers and prosperous businesses under the guise of taking a determined stride in ensuring that wealthier taxpayers pay what’s deemed their “fair share” in taxes. This stance, unambiguously reflected in their public pronouncements, puts wealthy individuals and successful businesses under a pronouncedly meticulous lens. Make no mistake, they are targets!

With an $80 billion influx from the Inflation Reduction Act, the IRS is ready to onboard 87,000 new agents, a hefty investment with an anticipated retrieval of $180 billion in additional revenue. The agency’s strategy is undeniably transparent: it’s targeting high-income earners, presuming that some may be employing illegal strategies to sidestep their full tax obligations.

In addition to this, the IRS has taken several pivotal steps. First, they’ve suspended a pandemic-era initiative, the Employee Retention Credit (ERC), which has been a financial lifeline for numerous businesses amidst the pandemic. Second, an additional 3,700 auditors are being recruited, specifically tasked with scrutinizing the financial filings of affluent individuals and complex business entities. Third, a new division focusing on corporations with substantial pass-through income is being established. Finally, non-traditional earners, especially those using digital payment platforms, will be subject to forthcoming regulations.

Regardless of your perspective on the IRS’s intensified tactics, a prevailing theme emerges: businesses and individuals alike, especially those in wealthier brackets, should brace for amplified scrutiny.

My streamlined advice: Join our Freedom Fighters membership and Fight Back! Because when the IRS comes calling, you’ll want your financial house in impeccable order. Welcome to the new era of fiscal vigilance. Go to OpemTax.com to become a Freedom Fighter!

Steven A. Leahy is a tax attorney in Illinois. He was the host of the long-running popular Radio Show “The IRS Radio Hour” heard every Sunday evening on AM 560 The Answer. Attorney Leahy is also the author of the book “Deal With Your IRS Problems Today!” You can get a FREE copy of this important book at FreeIRSBook.com. Or Call 24/7 (312)664-6649

Demystifying the New IRS Rule on Ticket Reselling

September 26, 2023 by admin

Tuesday, September 26, 2023 – In my IRS news feed today, there was a deluge of articles – count them, 15 – all spotlighting a fresh IRS rule concerning the resale of concert and sporting event tickets. Normally, when you see a spike in stories around a particular IRS subject, it screams of a new revelation, report, or directive by the IRS. I did a bit of digging but found nothing new.

But, let’s cut through the fog – this isn’t groundbreaking news. I’ve been on this story for some time now. This tax-related stipulation was slipped into the American Rescue Plan Act of 2021, amidst a maze of other budgetary components. It modifies the reporting standards of IRS Form 1099-K, a change that took some digging to unearth.

To bring you up to speed: In the past, Third-Party Settlement Organizations (TPSOs), think Ticketmaster and StubHub, were required to issue 1099-K reporting forms only to users raking in $20,000 in revenue AND logging more than 200 transactions. So, the paperwork was minimal. The new regulation mandates reporting for anyone pulling in over $600 in revenue, no matter the number of transactions, widening the net considerably.

This piece of regulation was scheduled to roll out in the 2022 tax year. But the IRS, seemingly playing it wise, put the brakes on it on December 23, 2022, right when the 2022 filing season was knocking on the door, labeling this delay a “transition period.”

Now, as the transition period wraps up, the new regulation is on deck for the 2023 tax year. There’s legislative maneuvering in progress to amend this rule. The Small Business Jobs Act is gunning to overturn the new rule and reinstate the old ones. Meanwhile, the Red Tape Reduction Act wants to boost the threshold to $10,000 in revenue and 50 transactions.

The final resting point of the threshold is yet to be seen. But what’s clear as day is that the IRS is poised to be swamped, seemingly unprepared for the impending avalanche of forms expected with any tweak to the current setup. It’s time to stay informed, be proactive, and always remember, in a world full of red tape and regulation, knowledge is your greatest ally and weapon.

Sole Proprietorship, LLC, or Corporation: Making the Right Choice

September 20, 2023 by admin

Monday, September 25, 2023 – Listen up, taxpayers—I’m here to tell you that your business structure isn’t just a bunch of paperwork; it’s a game-changing strategy. Get this wrong, and you’ll pay for it, literally—in taxes, and maybe even in lawsuits. But get it right, and you’re one step closer to financial freedom.

You’ve got options. Let’s start simple: Sole Proprietorship. It’s the easiest to set up but don’t get too excited. This structure ties your personal finances to your business, meaning if your business goes belly-up, your personal assets are on the line. And here’s another kicker: all your business profits are taxed as personal income. You think that’s smart money? Think again.

Now, let’s talk about the Limited Liability Company, or LLC. It’s the darling of the small business world for good reason. With an LLC, your personal assets get a layer of protection, and you can decide how you want the IRS to tax you. But remember, flexibility means more decisions; more decisions mean more room for mistakes. Get educated.

Then we have corporations—S-Corps and C-Corps. S-Corps are similar to LLCs but come with their own maze of rules. As for C-Corps, they’re their own beasts entirely. The corporate tax rate may be lower but beware of the double taxation trap. Profits can get taxed twice—first at the company level, then again when they reach your pocket as dividends.

Look, taxpayers, don’t play guessing games with your financial future. It’s critical to talk to a tax attorney and get the best advice for your specific situation. Remember, it’s not just about making money; it’s about keeping it, and making it work for you.

Beware Crypto-Traders: 1099 Forms May Bury You

September 20, 2023 by admin

Crypto-Tuesday, September 19, 2022 – Hey taxpayers, If you’re messing around with this Bitcoin and other digital money, you better brace yourselves. The government wants their cut too, and they’re real serious about it.

So here’s the thing: end of the year comes, and WHAM! You get hit with a ton of these 1099-B tax papers (soon to be 1099-DAs) What’s a 1099-B? Well, it’s a paper that says how much you made or lost trading stuff. And guess what? Every place you traded crypto is gonna send you one. So if you’re trading a lot, or using different apps to do it, you’re gonna have a mountain of papers to deal with. I have clients who received 100’s of 1099-B forms in one year!

Don’t think you can get just any brainiac with a calculator to figure this out. This crypto tax stuff is like the Wild West, and you need someone who knows the ropes. So get someone who really gets how digital money taxes work.

And here’s the kicker: some of these trading places don’t even send out 1099-Bs. So you gotta be real careful, or you’re looking for trouble with the IRS. My old man used to say, “Time is money.” So use your time wisely and get to know how taxes work with this crypto stuff.

Hey, I know it sounds like a headache, but life ain’t always easy, right? This is part of the game if you wanna get rich and keep your money safe. Just remember, the taxman always wants his share, so you better be ready. It’s not just about making a quick buck; you gotta be smart about keeping it too.

4.7 Billion 1099 Forms: More Coming!

September 19, 2023 by admin

Monday, September 18, 2023 – Listen up, taxpayers. You think you know, but you have no idea. The game’s changing, especially when it comes to taxes and the IRS. I’ve been teaching high-level classes on this stuff for years, and let me tell you, the best way to master something is to teach it. Currently, I’m working on my third class with Lorman Education Services, and we’re diving deep into the world of IRS Form 1099.

Now, I bet most of you have heard of a 1099 form. You’ve probably even received one. But do you actually know the true power behind this simple piece of paper? It falls under what they call “Information Returns,” and these are the IRS’s watchdogs, making sure you, me, and everyone else are paying our fair share.

Last year, get this, there were nearly 5.5 billion of these third-party information returns filed—5.5 billion! And a whopping 86% of those were 1099 forms. But it doesn’t stop there. There are 21 different flavors of this form, and the IRS just introduced a new one, Form 1099-DA, for digital assets. That’s right, they’re keeping an eye on your crypto.

And you know what else is hitting the headlines? The rules for the 1099-K cash apps. They were supposed to kick in, but Uncle Sam pushed it back a year. So, in 2023, the game changes. The threshold for getting hit with a 1099-K just plunged from $20,000 and 200 transactions to a mere $600. You think this won’t affect you? Think again.

Erin Collins, the Taxpayer Advocate, is speculating that this change might double the number of 1099s next year. If that happens, well, brace yourself for the IRS to be slower than molasses, trying to sort it all out.

So, if you’re in business, or thinking of getting into business, you better get your ducks in a row. These 1099 rules aren’t just random guidelines; they’re how the IRS keeps tabs on us. So educate yourself. It’s not just about making money; it’s about understanding the rules of the game so you can play it better than anyone else.

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Strategies for High-Income Taxpayers: Fight Back Against the IRS

Demystifying the New IRS Rule on Ticket Reselling

Sole Proprietorship, LLC, or Corporation: Making the Right Choice

Beware Crypto-Traders: 1099 Forms May Bury You

4.7 Billion 1099 Forms: More Coming!

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