July 20, 2018

Taxes: Here is how the IRS Contacts Taxpayers

Tax schemes abound; don't become a victim.  Many tax scams are masterminded by criminals posing as fake IRS agents.  We've all gotten these tax scam phone calls, right?!

From just-published IRS Tax Tip 2018-111, here is how the IRS contacts taxpayers:
  • The IRS doesn't normally initiate contact with taxpayers by email.
  • The agency does not send text messages or contact people through social media.
  • When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service.  Fraudsters will send fake documents through the mail, and in some cases will claim they already notified a taxpayer by U.S. mail.
  • Depending on the situation, IRS employees may first call or visit with a taxpayer. In some instances, the IRS sends a letter or written notice to a taxpayer in advance, but not always.
  • IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit.
  • Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities, but only after the taxpayer and their representative have received written notice.
  • IRS revenue officers and agents routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer. However, taxpayers should remember that payment will never be requested to a source other than the U.S. Treasury.
  • When visited by someone from the IRS, the taxpayers should always ask for credentials. IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential.
Tax Concerns?
About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information about Mary and her professional services visit FoutsFinancialGroup.com.

Mary Rae Fouts

July 17, 2018

2018 Individual Income Taxes: Changes if you have taken certain itemized deductions

Individual Income Taxes have been greatly impacted by the Tax Cuts and Jobs Act signed by President Trump in December 2017.  Some items have been talked and written about significantly in the press, news programs, and on social media, but very little has unfortunately been said about certain Miscellaneous Itemized Deductions.

Which may make for an unpleasant surprise for some taxpayers when they file their 2018 individual income tax returns.

I'm talking about Miscellaneous Itemized Deductions that, in the past, were able to be deducted from an individual income tax return on Schedule A if the total amount of such deductions was more then 2% of the taxpayer's Adjusted Gross Income (AGI).  Tax regulations often speak of these Misc. Itemized Deductions being subject to the 2% AGI floor.  These deductions were an important tax planning vehicle for certain groups of people, particularly those who had unreimbursed employment expenses (employed taxpayers), and people searching for a new job in their current field of employment.

Here are a few for the many Misc. Itemized Deductions subject to the 2% AGI floor:
  • Unreimbursed Employee Business Expenses;
  • A Portion of Union Dues;
  • Tax Preparation Fees;
  • Job Hunting Expenses for a Job in Same Employment Field;
  • Certain Nonbusiness Legal Expenses;
  • Investment-Related Expenses;
  • Uniforms and Similar Work-Related Clothing.

There are many more deductions, the above are just a few.

But you know what?  Did you notice my use of the past tense?  They're gone.  GONE.  Yes, the new tax regulations signed by President Trump repealed all ... ALL ... of the Misc. Itemized Deductions subject to the 2% AGI floor beginning on January 1, 2018.

If you have taken these deductions in the past, and still plan to file an itemized individual income tax for your 2018 taxes, these Misc. Itemized Deductions will not be available to you.  I welcome your call or email if you have questions about this topic.

Tax Concerns?
About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information about Mary and her professional services visit FoutsFinancialGroup.com.

Mary Rae Fouts

July 14, 2018

Power to the Clothesline! English Townspeople Support Woman who was Anonymously Shamed for Drying Laundry Outside

Claire Mountjoy
Photo credit:  nytimes.com
Reading this article - about laundry, of all things -  in last month's New York Times really made me smile! 

I use a clothesline in my backyard to dry laundry whenever possible.  I love the smell of outdoor dried bedding and clothing.  Well, except for a couple of weeks ago when my sheets picked up a faint smoky smell when smoke from Northern California wildfires blew into the area!  Plus using nature's natural drying cycle saves money on your utility bills, and is gentler on your bedding and clothing.

Anyhoo ... Apparently Colyton, England resident Claire Mountjoy shares my love of drying laundry outside. But some anonymous person did not. You see, she received an anonymous letter in her mailbox asking that she use a dryer, or dry her clothes inside, so that the town would keep "looking good".

That letter .... from a person too much of a coward to sign it ... didn't sit well with Claire's neighbors and Colyton's business community.  There was a true laundry revolt in the town, with people supporting Claire by hanging clothing all around town.  Heck, apparently one person even place a bra atop a flag pole!

Read the entire NYT article in the link above.

I guess I'll just call this one "Power to the Clothesline!".  And thanks to all of he Colyton residents and businesses who supported Claire Mountjoy!

About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information about Mary and her professional services visit FoutsFinancialGroup.com.

Mary Rae Fouts

July 12, 2018

Walmart Becomes the Latest Boneheaded Retailer. Just What Did Walmart Do?

Walmart may be the largest retailer in the world (Bet you thought it was Amazon, didn't you?!), but that didn't stop them from making a very boneheaded move.

Just what did Walmart do?

Well, looks like Walmart has been tone deaf to the reactions other retailers have experienced with controversial clothing lines.  You know, like fast fashion retailer H&M's decision to market a child's hoodie that said "Coolest Monkey In The Jungle" using a black young boy as the model.

H&M's "Coolest Monkey in the Jungle" Hoodie
Really, really NOT cool!

That went over well.  Really really well.  Not!

Getting back to Walmart ... The mega giant decided to dive head first into the bonehead category by introducing an "Impeach 45" clothing line.  As in Impeach President Trump.

Here's a peek:

Walmart's Impeach 45 Apparel Line
Shouldn't the world's largest retailer know that retail + politics = trouble?

Backlash has been fierce from conservatives.  The apparel has been pulled from Walmart's website sales, but is still available on Amazon through other vendors.  Apparently the impeach 45 clothing line was not sold in Walmart stores.

Regardless of my opinion of President Trump ... and I'll keep that to myself ... shouldn't retailers have figured it out by now that mixing retail and politics equals trouble?

Once again I am reminded that those who do not learn from history are bound to repeat it!

About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information about Mary and her professional services visit FoutsFinancialGroup.com.

Mary Rae Fouts

July 10, 2018

Muttville Senior Dog Rescue: Takes in 28 dogs from a beloved local dog rescuer who passed away.

Muttville Senior Dog Rescue in San Francisco, California is a beyond fantastic non-profit dog rescue organization.  With a passel of volunteers, Muttville is dedicated to rescuing, caring for, and re-homing senior dogs ... including  dogs other shelters may have euthanized.

And they do the world's greatest at it!

Ready to some inspirational news?  Last month, Muttville took in 28 senior dogs from just one location, the large rural home of a beloved Solano county, California dog rescuer who had passed away.  So grab a tissue and watch the heartwarming video below about the late dog rescuer Marline, Muttville, and Marline's 26 senior dogs!


About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  She has 2 Faithful Canine Companions, Husky-Malamute mix Sid and Chow Chow-Pomeranian mix Lexi.  For more information about Mary and her professional services visit FoutsFinancialGroup.com.

Mary Rae Fouts

July 7, 2018

Sales Tax: Head Shaking Regulations Make Compliance Nearly Impossible

Sales Tax.  Technically called Sales and Use Tax in many jurisdictions.  And the bane of all businesses that are required to collect it.

The topic of sales tax as been a hot discussion item recently,  given the United States Supreme Court's recent 5-4 decision (read it here) that states can impose sales tax on Internet purchases.  This new ruling effectively overturned the Court's 1992 Quill decision, which required a physical presence in a state before collecting sales tax.

While I concur with the Court's decision, the unaddressed issue about sales tax is very simple:  For businesses required to collect sales tax, the myriad of head shaking regulations makes full compliance nearly impossible.  And for nationwide businesses, they must deal with completely different sales tax regulations within the 44 states plus the District of Columbia that impose the tax.  (Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a general statewide sales tax.)  Oh, and different sales tax rates within every county, town, and city.  Take a look at a few sales tax rules.  Do these make any sense to you?

Massachusetts:  Clothing and footwear is exempt from sales tax.  Well, kinda.  The exemption is limited to clothing and footwear costing $175 and less.  For costlier items, sales tax is imposed portion of the purchase price about $175.

But wait, there's more!  "Certain" clothing and footwear items are always taxed.  Among items included in this always taxed group are shower and bathing caps, purses and handbags, the much-in-demand handkerchiefs, and clothing worn by horse jockeys.

Colorado:  "Canned" software that is purchased by disc or on other tangible personal property is subject to sales tax.  However, "canned" software purchased and downloaded electronically is exempt.  But  .... if you purchase and electronically download electronic media including music and books, those items are subject to sales tax.

Electronic Filing of Tax Returns and Electronic Payment of Taxes:  Want to electronically file your tax returns or electronically pay your taxes?  Every state that imposes a sales tax imposes the tax on the fee charged to electronically file your tax returns or pay your taxes.  So yep, you get to pay a tax in order to pay your taxes!  Yippee!!

California:  I could do a month worth of posts about California's sales tax quirks; I'll stick with a few for now.

California - Prescription Medication:  Prescription medication is exempt from sales tax in California.  Well, not really.  If you are human, it is.  But if you purchase a prescription for you dog or other pet, even if it is a medication also used by humans, the prescription is subject to sales tax.  It doesn't matter if the medication is purchased from your vet or a human pharmacy such as Walgreen's.

California - Food:  Complying with THIS items is a mind-numbing doozy!  Food eaten at a restaurant is always subject to sales tax, while the same food ordered and taken to go may ... or may not ... be subject to sales tax.  Oh, and it also depends on whether or not the food is hot or cold when taken to go.

But wait, there's more!  As in exceptions.  Here's a bit of what California sales tax regulations say on this topic:
"Sales of food for human consumption are generally exempt from tax unless sold in a heated condition (except hot bakery items or hot beverages, such as coffee, sold for a separate price), served as meals, consumed at or on the seller's facilities, ordinarily sold for consumption on or near the seller's parking facility, or sold for consumption where there is an admission charge."
Got that?!  And golly gee, just exactly what foods do - and do not - fall into the above categories is subject to anyone's interpretation, including your California State Tax Auditor in a sales tax audit.  Here's what one of California's state taxing authorities, the State Board of Equalization, once had to say on this food and sales taxes matter:
"A cold food product sold individually and to go is not taxable. The sale of a cold food product sold as part of a combination package may be taxable ... If you sell an egg salad sandwich to go, you are not liable for tax on the sale. However, if you sell an egg salad sandwich as part of a combination package, you may be liable for tax."
Once again, got all that?!  May be taxable??!!   Geesh!!

I swear, if our politicians that enact these taxes actually had to run businesses and deal with sales tax compliance and collection, we'd see much simpler sales tax regulations!

Sales Tax Concerns?  
About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information about Mary and her professional services visit FoutsFinancialGroup.com.

Mary Rae Fouts

July 5, 2018

L.L.Bean: Lawsuit Against Outdoor Retailer's New Return Policy Given The Boot!

In this February 16, 2018 post, I wrote about outdoor retailer L.L.Bean's new return policy.  A small - but growing - number of people were abusing the no questions asked, lifetime return guarantee the company had maintained for decades.  The revised return guarantee (effective with L.L.Bean items purchased beginning February 9, 2018) provides a one-year return limit for most items.

And, as anyone who does any shopping knows, a one-year return limit is very ... very ... generous.

But, alas, not generous enough for some people.  As I stated in my original post, within 3 days of the return guarantee change, L.L.Bean was served with a lawsuit requesting class action status, claiming that consumers are damaged because L.L. Bean was dishonoring its "warranty", and therefore consumers are deprived of the said "warranty" they purchased.

Thankfully, a Federal Court Judge disagreed, and recently - pardon the pun - gave the lawsuit the boot!  The Judge stated that the Illinois plaintiff failed to prove (1) that he was financially damaged by his purchase of L.L.Bean boots, or (2) that he was dissatisfied with the boots he purchased.

Similar lawsuits against L.L.Bean are pending in three other states, including litigation-crazy California.  Hopefully they will get the boot, too.

United States Courts.  There's always somthin' crazy going on!

About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients who have technical or complex concerns.  For more information about Mary and her professional services visit FoutsFinancialGroup.com.

Mary Rae Fouts