It may not be the first thing on everyone’s mind as we head in to the holiday season but for your local CPA, taxes are certainly on the mind. Year end tax planning is always a good idea for a proactive business owner or individual but this year it may be even more important than ever with tax reform coming down the pipeline.

You can’t open a newspaper lately without seeing talks about tax reform. The back and forth and uncertainties surrounding tax legislation is making for an entertaining situation for your local tax nerd. Both the House and Senate have their own plans that are changing by the second; odds are the analysis you read one day will completely change a week later and many details we are hearing about now may be totally different by the time legislation comes across the President’s desk (if that even happens). As your average everyday business owner and taxpayer, you care about the financial well being of you and your company, but chances are you don’t have the time or patience to keep up on the constant changes happening on Capitol Hill. While you may not think any legislation will affect you in the short term, you may be wrong and there may be moves you need to make by the end of 2017.

With uncertainty in the air and the year quickly coming to an end, right now is a great time to get in touch with your accountant. We can educate you about tax reform and its specific effects on you, and help you make sure you make the right moves by year end. Having a good CPA as part of your advisory team is an invaluable resource during times like this.

It’s only November but there’s still time to make the filing of your 2017 tax return less taxing in 2018.

Withholding and Estimated Taxes. Make sure enough taxes are withheld to avoid surprises at tax time. Generally taxes are withheld from wages and other income such as pensions, bonuses, commissions and gambling winnings. Taxpayers with interest, dividends, capital gains, rents and royalties will usually make additional tax payments by making estimated tax payments. Self-employed individuals who do not pay tax through withholding will also pay estimated taxes.

1. Employees starting a new job must fill out a Form W-4, Employee’s Withholding Allowance Certificate. Use the IRS Withholding Calculator to figure out how much tax to withhold.
2. Taxpayers expecting to owe $1,000, or more than taxes that are withheld, will need to make estimated tax payments to avoid penalties.
3. Martial status changes, birth of a child or the purchase of a home may change the amount of taxes a taxpayer owes. Employees should submit a new Form W-4 to their employer when necessary.

Name changes. Taxpayers with name changes due to a marital status change should notify the Social Security Administration. SSA should also be notified if there’s a name change for a dependent. Notifying the SSA with name changes will ensure that the new name on the tax return matches the SSA records to avoid any delay in the processing.

Individual Taxpayer Identification Numbers. Taxpayers who use Individual Taxpayer Identification Numbers which have expired or are due to expire should apply to renew their ITIN to avoid processing delays next year. A Form W-7 must be completed as well as submission of original or certified copies of identity documents to renew an ITIN.

With the passing of another tax deadline, I thought it would be helpful to go over the consequences of not filing your tax return on time. If you have not filed your 2016 tax return, file it as soon as possible to minimize the penalties that you may owe.

There are three types of payments that could be assessed if you do not pay the tax owed on time. These are late filing penalties, late payment penalties, and interest.

If you owe taxes and don’t file your tax return or extension by the original due date, or if you filed an extension but fail to file your return by the extension due date you will be subject to late filing penalties.

The late filing penalty is 5% of the tax owed for every month your return is late, up to a maximum of 25%. If you fail to file your return for over 60 days after the due date or extended due date, the minimum penalty is the lesser of $205 (for 2016) or 100% of the unpaid tax due.

Late payment penalties could be assessed if you do not pay all of the taxes you owe. These apply if you do not pay all of the taxes owed by the original due date, regardless of whether or not you filed an extension. The late filing penalty is 0.5% of the tax owed for each month the tax remains unpaid, up to a maximum of 25%.

If both penalties apply to you the monthly penalty would be 5%, up to maximum penalty of 25%.

You will also be charged interest on any unpaid taxes starting the day after the return’s due date.

If you correctly expect to get a refund there is no penalty. You have three years to file from the due date or you will no longer be eligible for your refund.

Recently I had the delight to visit Graceland, Elvis Presley’s former home and now an excellent place to reflect on Elvis’ life and get taken back in time to the 1970s. There I viewed many of Elvis’ cars including his pink Cadillac, a couple Rolls Royce’s and Mercedes, Lincolns and his Ferrari. His home was just how he left it back in 1977 with his dozen TVs scattered throughout the home, shag carpeting and roof, the colorful kitchen, his dad’s old office, and many other furnishings that were a flashback to the 70s.

As a CPA and tax guy, I was also fascinated with the financial documents that were displayed detailing many of Elvis’ large purchases and even his dad’s tax return after he was born showing he paid 1% tax on his income . Elvis must have trusted his dad immensely as there were dozens of checks signed by Elvis’ father Vernon as Vernon took care of all of his son’s finances. This is surprising given that Vernon spent a year in jail during Elvis’s childhood for check forgery and only had an eighth grade education.

Elvis would have benefited immensely if he would have utilized a CPA to assist his dad in tax planning and financial management. Even though Elvis was the largest U.S. taxpayer in 1973 and the highest paid entertainer for many years, he died with an estate worth “only” $10.2 million dollars. Apparently Elvis didn’t like to utilize pertinent tax deductions and had a horrible deal with his manager Colonel Tom Parker, who received over 50% of Elvis’ earnings . Parker even convinced Vernon to pay him 50% of the income from the Elvis’ estate after he died! With this mismanagement, Elvis’ estate lost $9 million in value over two years, and was only worth $1 million in 1979.

Many lessons can be learned with Elvis, but one financially is the importance of trusts for estate planning in which attorneys can be invaluable and utilizing competent and qualified CPAs to assist with tax, estate and financial planning.

In September of 2016, the IRS announced that it would start using private debt collectors to recover certain overdue federal tax debts in the spring of 2017. To implement this new program, the IRS contracted with four private collection agencies: CBE Group, Conserve, Performant, and Pioneer. In carrying out their collection efforts, these four companies are required to respect taxpayer rights and obey the consumer protection regulations established in the Fair Debt Collection Practices Act.

How does this new program work?

Considering the continual mail and phone scams that keep emerging, the IRS Commissioner warned taxpayers to be alert for new scams related to this program. When a taxpayer’s account is transferred to a private debt collection agency, the IRS will give the taxpayer written notice of the transfer. In addition, the private collection agency will then send a second, separate letter to the taxpayer verifying this transfer. The private collection agency will not ask for payments to be made on a prepaid debit card or for checks to be made out to the collection agency. All checks should be made payable to the U.S. Treasury. The IRS emphasized that even with private debt collection, taxpayers should not be receiving phone calls from the IRS insisting on immediate payment. The IRS always mails multiple collection notices before making phone calls.

There are several types of accounts that the IRS will not transfer to private collection agencies. Some of these accounts include taxpayers who are deceased, in designated combat zones, victims of identity theft, or in presidentially declared disaster areas and requesting relief from collection. If a taxpayer does not want to work with a private collection agency appointed to his or her account, he or she must notify the private collection agency in writing. Also, the IRS urges taxpayers who are unsure if they have unpaid taxes due from a previous year to check their account balances on www.irs.gov/balancedue.

For more information on private debt collection visit the Private Debt Collection page on the IRS website.

Right before this year’s tax deadline, the IRS put out a release reminding people that some of us may not have to ask for an extension. While this advice is coming a bit late from me for the current tax year, it is definitely something to keep in mind. As the IRS notes “Taxpayers in Presidentially-declared disaster areas, members of the military serving in a combat zone and Americans living and working abroad get extra time to both file their returns and pay any taxes due.”

If you are a taxpayer in a disaster area you will often have extended time to file and pay. These extensions of time also apply to other tax-related items like contributing to an IRA. The IRS states that generally any area given a disaster declaration by FEMA is provided this relief, which is extended to relief workers, businesses and anyone who has their tax records located in the disaster area.

If you are a member of the military or eligible support personnel serving in a combat zone you will have at least 180 days after you leave the combat zone to file your tax returns and pay your taxes. As with the disaster relief, this extension also pertains to other tax-related items like contributing to your IRA. The IRS suggest checking Publication 3, Armed Forces’ Tax Guide, for further details.

For U.S. citizens and resident aliens who are living and working outside the United States and Puerto Rico, you have until June 15, 2017 (for the current tax year) to file your return and pay any taxes due. This also applies for military members on duty outside the U.S. who do not qualify for the combat zone extension. The IRS does note two items with this category of extended filing: 1) Attach a statement with your return explaining which situation applies for you; and 2) interest still applies to payments received after the standard filing deadline (generally April 15). See Publication 54 for more information.

For everyone else, just remember to ask for more time by filing Form 4868.

A trust can be set up for a multitude of purposes in various forms and of course there are tax consequences, with which a Reno CPA can assist you. There are many moving parts with trust taxation, but simplistically nongrantor trusts must file a federal tax return of which the highest income tax rate is assessed on incomes over $12,400, as opposed to a single person with this threshold over $415,050.

Various state income taxes can also be assessed by merely having a trustee in a state like California or Colorado, even if the beneficiary lives in another state that doesn’t impose personal or trust income taxes like Nevada. These states consider the trust to be a resident trust in that state as the trust is administered in that state by having the trustee located there.

As you can probably guess, California’s trust taxes can be quite onerous. The trust tax rate can reach 12.3% of taxable income. Combined with the federal tax rate of 39.6% and the additional tax on investment income to pay for the Affordable Care Act of 3.8%, a California trust could be taxed at up to 55.7%!

This 12.3% California trust tax can easily be avoided by choosing a trustee that resides in the state of Nevada, even if the beneficiary lives in California. A trustee can be a trusted family member, banker, attorney or a CPA. For any trust related tax questions the Reno CPAs at Barnard Vogler can help sort through the regulations.

The IRS is warning that con artists are using video relay services (VRS) as a way of potentially scamming deaf and hard of hearing individuals. It appears these bad actors are using VRS just like many of the other phone and email scams that are constantly being reported. These people will call claiming to be from the IRS and demand payment of a tax debt or say that the taxpayer is due a refund. Simply, these scammers are looking for personal information. As always, do not give out personal and financial information to anyone you do not know and confirm that the person requesting information really is who they claim to be. The IRS adds that people should not assume they can trust VRS calls as VRS interpreters do not screen calls for validity.

As listed on IRS.gov, the IRS will never:

• Demand immediate payment and require the payment be made a specific way, such as by prepaid debit card, gift card or wire transfer. In most cases, the IRS will not call taxpayers about taxes owed without first having mailed a letter to the taxpayer.
• Threaten that local police or other law-enforcement groups will immediately arrest taxpayers for not paying a tax bill.
• Demand that taxpayers pay taxes without giving them the opportunity to question or appeal the amount owed.
• Ask for credit or debit card numbers over the phone.

If a deaf or hard of hearing individual suspects they received one of these calls, they should call the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484. The IRS now accepts calls from all type of relay services whether they are federal, state or private relay providers. The IRS also has YouTube videos in American Sign Language (ASL) with a listing that can be found here. A YouTube video in ASL about this VRS scam is also available.

It’s that time of year again, that time when you have to file your tax returns. It is also the time of year where the scammers come out of the woodwork to try to steal your money and/or identity. Scammers will try many different things to get information from you, with the list below a selection of the some of the most common ones for 2017 (so far).

1. Email Phishing – Scammers will send an email to you that appears to be from the IRS saying such things as “You must pay this tax amount now” and “Send your information to this email to avoid penalties”. Be very cautious of these emails and don’t hesitate to ask a tax professional for any advice on how to proceed.
2. Phone Scams – The IRS will NEVER call people randomly and say that they must make a payment immediately. They will always contact you by U.S. mail first. If you receive a call that you feel may be alarming or threatening just hang up and report it to the IRS at phishing@irs.gov.
3. Email Look-A-Like – Tax preparers will send you emails from time to time to talk about tax prep and planning, but this new type of scamming is when a scammer will send a tax related email to you, but from a fake email address that looks very similar to the ones we use. For instance, ehastings@bvcocpas.com is a proper email from Barnard Vogler & Co., but be sure that you are not getting an email from ehastings@outlook.com. That is a fake email, where the scammer just looks for you to send your information to them or attach a pdf that you go and open, which can include a virus. This one is tricky, but pay attention to all emails that you receive to avoid this scam.

These are just a few scams of the many that are out there. Educate yourself by going to IRS.gov and report any phishing emails to

We all know how it goes – as soon as the New Year begins the tax forms begin filling up your mailbox. Just another year to throw the 1099s and W-2s in a pile and ship them off to your accountant just in time to throw a return together and be done with it. Many people see tax time as a necessary evil which they grin and bear their way through the steps in order to get it done and over with. If you are one of these people you may benefit from doing things a little different this year and seeing where it gets you.

There are many benefits to paying attention during your tax filing process if you have never cared or take the time to understand before. It doesn’t matter whether you are a wealthy business owner or just a normal guy or gal working for your paycheck – a good CPA can help you get the most benefit not only tax wise but possibly financially as well. Taking time with your tax preparer to understand the why’s and how’s can open your eyes to things you may be able to do differently to better your tax or financial position in the future. If your accountant does not have your best interest at heart then find a new one because a good accountant takes a personal interest in their clients and wants to see them do as well as absolutely possible. A good accountant will not only be able to prepare your tax return to its fullest potential but they are able to advise you on future moves and desires.
This year, make a resolution to spend some time with your accountant, learn something new, and solidify the relationship. Having a trusted advisor as opposed to a tax preparer on your team will take you a long way and be worth every penny.