IRS urges travelers requiring passports to pay their back taxes or enter into payment agreements…for people owing $51,000 or more, or you may be putting your passports in jeopardy!

This month, the IRS will begin implementation of new procedures affecting individuals with “seriously delinquent tax debts.” These new procedures implement provisions of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015. The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Taxpayers affected by this law are those with seriously delinquent tax debt. A taxpayer with a serious delinquent tax debt is generally someone who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

  • Paying the tax debt in full
  • Paying the tax debt timely under an approved installment agreement
  • Paying the tax debt timely under an accepted offer in compromise
  • Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice
  • Having requested or have a pending collection due process appeal with levy, or
  • Having a collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

A passport won’t be at risk under this program for any taxpayer:

For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the Individual’s passport is not subject to denial during this time.

In general, taxpayers behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS. Let Bourke Accounting help you with these issues. Give us a call today at 502-451-8773 or come in for a visit. See you soon!

We have all worked at places where we look at management and think how on earth is that person a manager. Managers play a  critical role in hiring and motivating employees, enforcing policies and rules, and promoting a fair and productive workplace. This is particularly true for small employers, where a single bad manager can wreak havoc. Here are 10 signs you may have a bad manager:

  1. Takes all the credit, none of the blame. Public recognition can be a powerful motivational tool for employees. If managers accept all of the credit for successful projects, it can have the opposite effect. Make sure managers recognize employees’ contributions consistently and take responsibility when things go wrong.
  2. Employees seem surprised by their performance rating. Managers should provide performance feedback throughout the year and not wait until a formal review at the end of the year. If you are noticing employees are surprise by what they find in their annual performance review, a lack of ongoing feedback may be to be blame.
  3. Performance feedback is too good (or bad) to be true. If managers give every employee high marks or every employee low ratings, this can leave employees feeling that performance isn’t valued. Make sure managers evaluate employees on legitimate, job related factors, and that reviews accurately reflect employee performance. Train managers on how to set appropriate performance goals and provide effective feedback.
  4. More turnover/transfer requests. Employees who feel they have a bad boss are more likely to quit or request a transfer to another department. monitor turnover and conduct exit interviews to find out why employees are leaving. Following a transfer request, ask the employee what prompted the request for a change. Additionally, look for ways employees can provide anonymous feedback about their supervisors, such as regular surveys or during the performance review process.
  5. They think they are above the rules. Managers need to set a good example. If they aren’t following basic rules and expectations (such as by coming to work late, leaving early, skipping training, arriving to meetings late, failing to return emails and phone calls), employees may follow suite.Hold managers accountable for following the rules and expectations you set for all employees.
  6. Allows “star” employees to break rules. While it is a good idea to reward high-performing employees, they should still be held to the same standards and rules. If employees see managers treating “star” employees leniently when they break the rules, it will likely breed a culture of mistrust, prevent employees from coming forward with complaints should they witness misconduct, and encourage others to break the rules. make sure managers enforce rules and policies consistently.
  7. Discipline is too soft or too hard. When deciding what form of discipline to take when an employee violates your performance or conduct standards, consider the severity of the offense, the employee’s past performance and conduct, and how you have treated employees in similar situations (to ensure consistency).
  8. Fails to keep adequate documentation. Without proper documentation of past performance and conduct, managers can put employers in a difficult position. Documentation can help support employment decisions and show that you provided the employee with an opportunity to improve. Hold managers accountable for thoroughly documenting all performance and conduct issues as well as disciplinary actions, including verbal warnings and counseling services.
  9. Their job offers keep getting rejected. There are many reasons that a candidate might decline a job offer., However, it is also possible that the candidate’s interactions with a bad manager during the hiring process could be the cause. Ensure that mangers are properly trained on the hiring process and that they’re putting their best foot forward.
  10. Always gives employees a hard time about taking time off. Various federal, state, and local laws prohibit employers from discouraging employees from taking leave to which they are entitled. Even if you offer the leave voluntarily, time off from work is important for employees to recharge and take care of personal responsibilities. Rarely should managers discourage employees from using the time they’ve earned.

All these problems above can be addressed with proper training, policies, and oversight. Make sure you devote the time and resources to making your managers successful. If you need any help with policies and procedures, give Bourke Accounting a call at 502-451-8773 as we can help with all aspects of your office. Come see us soon!

With the onset of The Tax Cuts and Jobs Act we get many questions about how the tax changes effect your financial situation, AND the IRS gets plenty of questions as well, though they are slowly giving us the answers. (insert smiley here) Here are some recent questions they are asked (and answers) re the new withholding tables.

Q: Why are these changes being made?

A: The new withholding tables are needed to reflect the changes in tax rates and tax brackets, increased standard deduction and repeal of personal exemptions that were included in the new tax reform law signed in December. The withholding guidance issued today is for employers to make changes to their payroll systems and is designed to work with existing W-4s that employees have on file.

Q: How soon will people see the changes in their paychecks?

A: Employees should begin to see withholding changes in their checks in February. The exact timing depends on when their employer can make thew change and how often they are paid. It typically takes payroll providers and employers about a month to update withholding changes on their systems.

Q: Will employees need to take any action to get the new withholding rates?

A: No, Payroll changes required each year are made by employers and their payroll providers, so employees are not required to take any extra steps. However, employees should review their withholding to make sure that it is accurate. IRS will be releasing a new calculator and Form W-4 soon, to help ensure withholding is accurate.

Q: What is a withholding table?

A: A withholding table shows payroll service providers and employers how much tax to withhold from paychecks, given each employee’s wages, marital status, and the number of withholding allowances they claim.

Q: Will people need to fill out a new W-4 for right now?

A: No, the new withholding tables are designed to minimize taxpayer burden as much as possible and will work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. The IRS is working on revising the Form W-4 to more fully reflect the new law and provide taxpayers information to determine whether they need to adjust their withholding.

If you have any questions on your withholding in relation to your tax return, let Bourke Accounting help you. Give us a call today at 502-451-8773 or come by for a visit. See you soon!

After making significant progress in combating identity theft aimed at individuals, the IRS is shifting its focus to business identity theft. At a recent Nationwide Tax Forum, IRS Commissioner John Koskinen indicated that over 10,000 fraudulent business tax returns were filed by criminals during the 2017 filing seasons (up from 4,000 in 2016). This is largely due to the increasing number of cyber attacks aimed at tax professionals to steal taxpayer information and file fraudulent tax returns. The IRS continues to warn practitioners to protect their client data and themselves.

As a result of the steady increase in email scams and cyber attacks, the Security Summit – a group that includes the IRS, State Tax Authorities and Tax Industry Firms – has launched awareness campaigns. The “Don’t take the Bait” campaign encourages -practitioners to increase their computer security and be cautious when opening email attachments. This includes establishing policies and training staff to understand and adhere to them.

The IRS plans to take a greater role in combating business identity theft. The agency, for example, will soon be asking practitioners to gather more information on their business clients. For 2017 business returns filed in 2018, tax preparation software will require the following information: the name and Social Security number of the company individual authorized to sign the return; estimated tax payment history; parent company information; additional information based on deductions claimed; and filing history for the company’s other business-related tax forms, such as 940 and 941. Although this may create a little more work for the practitioner, providing the additional information will help the IRS spot fraudulent returns.

At Bourke Accounting we have state of the art software that upgrades continually and protection on every computer and smart phone. We have implemented polices and procedures that the IRS requires of tax and bookkeeping offices and feel confident of our security status. So come on in and let’s work on making your financial life secure as well. Call us today at 502-451-8773, or stop by for a visit. See you soon!

Although new federal income tax tables and rates will take effect on January 1, there may be a delay in release of withholding tax guidance from the U.S Treasury Department for employers. In the meantime, the Internal Revenue Service (IRS) has explained that employers may use existing (2017) withholding tax tables and guidance until new guidance is released. According to a notice dated December 3, 2017, the IRS “anticipates issuing the initial withholding guidance (Notice 1036) in January reflecting the new legislation, which would allow taxpayers to begin seeing the benefits closely with the nation’s payroll and tax professional community during this process.”

The Act authorizes the Treasury Department to permit employers to apply existing wage withholding to rules and calculations throughout 2018, although this seems unlikely. According to H.R. 1 and the conference report:

“…the Secretary (of the Treasury) may administer the withholding rules under Section 3402 for taxable years beginning before January 1, 2019, without regard to the amendments made under this provision. Thus, at the Secretary’s discretion, wage withholding rules may remain the same as under present law for 2018.”

However, to avoid adversely affecting taxpayers, Treasury is likely to issue guidance as soon as possible, to align employer wage withholding calculations with the new income tax rates which will take effect on January 1, 2018.

Did you know at Bourke Accounting we process all types of payroll, even out of the country employers ? Let us help you! Give us a call at 502-451-8773 and come by for a visit. See you soon!

 

Instead of making an outright sale of commercial or investment property, the tax law enables you to “swap” it for like-kind property with out paying any current tax. However, things aren’t usually so cut-and-dried in the real world. For one thing, it is unlikely the potential buyer of your property will own any real estate you desire.

Strategy: Use a “qualified intermediary” to facilitate deals. The intermediary can be inserted in the middle of a multiple-party exchange. In the end, you wind up with a property you want.

Like-kind exchanges involving multiple parties are often called “Starker exchanges” after the landmark case approving their use. (Starker 602 F2d 1341, 9th Cir., 1979) As long as you meet the tax law rules and deadlines for a Starker exchange, you can swap property tax free.

Here’s the whole story: The tax law definition of like-kind property is a relatively liberal one. It refers to the nature of the property, not its quality or grade. For example, you can swap a warehouse tax free for an apartment building or even raw land. You owe tax only to the extent you receive any “boot” as part of the deal (e.g., cash or reduced mortgage liability or property that is not like-kind).

But, there are two key time restrictions:

  1. The property that you will receive in the exchange must be identified within 45 days of transferring the property.
  2. The property must be received within the earlier of 180 days after the transfer or the due date of the tax return for that year (including any extensions of the due date).

Fortunately , a qualified intermediary can help you overcome these timing hurdles.

Example: You use a qualified intermediary for a Starker exchange involving four parties. Technically, you (the first party) sell the property you’re relinquishing to a cash buyer (the second party). But the cash buyer pays the intermediary (the third party) instead of you. The intermediary holds the proceeds until you identify a suitable replacement property.

At that point, the intermediary uses the sales proceeds to buy the replacement property from its owner (the fourth party). Finally, the intermediary transfers this property to you to complete the like-kind exchange.

For tax purposes, you’ve considered to have swapped properties tax free with the intermediary. That’s because no cash actually exchanges hands (except to the extent cash boot is involved). The intermediary handles the funds on your behalf.

To qualify for tax free treatment, you and the qualified intermediary must sign a “Qualified Exchange Accommodation Agreement.” The agreement should state that the intermediary is holding the property to facilitate a tax-free exchange. The intermediary must also agree to meet all the technical reporting requirements spelled out by the IRS.

At Bourke Accounting we can help you with all of your tax needs; Need an intermediary? Call us at 502-451-8773. See you soon

Yes I know this is a late Christmas blog, but I felt since we are a Tax & Bookkeeping Service that my focus should be on the current tax changes….BUT since it is Christmas I felt I would do a fun blog about buying gifts for your partner at various relationship stages. Happy Holidays!

  • When you’ve been together say 2 months… Chances are you are probably still putting your best foot forward after two months, so you want to get something thoughtful, but not go too far. You could always consider getting them a $100 gift certificate for a spa day or massage. hmmm
  • When you’ve been together say 2 years… If you haven’t already bought them a ring, now may be the time. Otherwise, think about their passions and support them in some way. That could mean getting them something educational like a one-on-one with a personal organizer or guitar lessons if they’re a musician, hmmm
  • When you’ve been together say 10 years… You’ve exchanged may gifts by now, but romance never gets old. Try buying tickets to see a band you both connected on early in your relationship, like the singer who was playing on the radio when you shared your first kiss. It’s nostalgic, romantic and really thoughtful. hmmm
  • When you’ve been together say 40 years… What is your partner’s lifelong dream,? Make that dream a reality. Whether it’s a month long trip to Thailand, a few weeks at a villa in Italy or running with the bulls, help your partner cross something off their bucket list. they deserve it. hmmm

There you have it…at Bourke Accounting we are always available to give our opinion on pretty much an subject. We wish you all holiday happiness all year round. Come see us soon!

I’m one of those people that love to read…books, magazines, journals. I used to list reading as a hobby on those questionnaires that I would answer but too many people called me a nerd so I stopped and replaced “reading” with “fishing.” I find that in December there are so many lists that are published and some are pretty interesting to read, and some not so much. This list that I am blogging about today is a good one as it begins with the benefits of owning a dog.… so here are some of the things in our lives that are good for us…

Dogs as they help their owners live longer and healthier lives. A Swedish study involving more than 3.4 million participants found that people with a pooch had a lower risk of cardiovascular disease and premature death. The link was especially pronounced among people who lived alone. Those with dogs were 33 percent less likely to die early, and 11 percent less likely to suffer a heart attack.

Camping could help cure the grogginess and lethargy associated with poor sleep. In a University of Colorado, Boulder study, volunteers who went camping for a weekend slept almost two hours longer than normal during the trip; on their return, their melatonin levels started rising more than two and half hours earlier than before. Researchers believe this is because increased exposure to natural light helps reverse the adverse effects that modern indoor lifestyles have on the body’s internal clock.

Chili Peppers may help you live longer. In a study involving 16,000 people over about two decades, University of Vermont researchers found that those who routinely ate the hot pods were 13 percent less likely to die during that period than those who didn’t. They suspect that capsaicin the active ingredient that give peppers their heat, might boost metabolism and help prevent obesity, high blood pressure, inflammation and cancer.

Coffee does more than wake you up. Two large studies involving diverse groups of adults found that people with a daily coffee habit were less likely to die from heart disease, stroke, diabetes, or cancer. Over a study of 16 years, people who drank two to four cups of Joe a day – decaf or regular – were 18 percent likely to die. Researchers believe the drink’s health benefits stem from its complex mixture of powerful disease-fighting antioxidants.

Marriage could help ward off dementia. An analysis of 15 studies involving more than 800,000 people found that those who never married had a 42 percent higher risk for this form of mental decline than those who tied the knot. Married couples tend to encourage each other to stay active, follow a healthy diet, limit alcohol consumption, and stop smoking – habits associated with reduced risk for dementia.

Breakfast could be the most important meal of the day. A study involving 4,052 healthy men and women found that those who generally didn’t eat breakfast were more likely to develop atherosclerosis, or clogged arteries. Researchers say this is likely because breakfast-skippers tend to eat more calories and unhealthy foods later in the day.

Running for a couple of hours each week could reduce the risk of early death by nearly 40 percent. After analyzing existing evidence on the link between exercise and longevity, researchers calculated that one hour of running-even at a slow pace- lengthens life expectancy by seven hours. This adds up over time; people who run regularly tend to live about three years longer than their non-running peers.

And I would remiss of I did not mention….

Finding the Perfect Tax Accountant which will relieve undo stress when it comes to finances. At Bourke Accounting we know life is not black and white. We will work with you through life’s changes; those that are expected and those that are not. Our focus is on tax preparation and bookkeeping services, but our personalized service and dedication brings our clients back year after year. Give us a call today at 502-451-8773 and set up that appointment to let us help!

Say Your aging parents live in a home that has appreciated in value, but they’re no longer reaping any of the home ownership tax breaks during their retirement years. Sound familiar?

Good news: With one stroke of the pen, both you and your parents can win: They’d gain instant access to their home equity (without moving) and you’d pick up some generous new tax deductions.

How? Buy your parent’s house, and then rent it back to them – at the going rate.

Reasons for the sale/leaseback. Under the current home ownership set up, your combined family unit is overpaying the IRS.

Your parent’s mortgage is either paid off or the payments represent mostly principal at this point. Even if they still take interest deductions, your parent’s tax bracket might be low in retirement, so those deductions don’t provide much tax savings.

Here are two good reasons for your parents to opt into this plan:

  1. It puts cash in their pockets without them dipping into a home equity loan.
  2. It allows them to put their money into safer investments than the real estate market.

Transferring the house. To avoid gift-tax complications, pay a fair price for the home. Support the buying price for the home with a qualified and independent appraisal. Then, both sides should enter into a lease at a fair rental value.

One benefit: Courts have said that landlords can reduce their fair-market rent by 20% when renting to relatives. The lower rent reflects the savings in maintenance and management costs . (L.A. Bindseil, TC Memo 1983-411).

Don’t set the rent too low; the IRS might say the rental home is for your personal use. Therefore, your deductions might be limited to the mortgage interest and property tax, the same as if you owned a vacation home.

Taking deductions. Once you own your parent’s house, you’re entitled to reap the tax benefits of owning rental property.

That includes taking write-offs for operating expenses, such as utilities, maintenance, insurance, repairs and supplies.

You also can claim depreciation deductions for the home, but you can’t depreciate the cost of the property apportioned to land.

So obtain an appraisal allocating the price paid between the depreciable structure and the nondepreciating land. You can use these deductions to offset the rental income received from your parents. You can take any suspended losses when you sell the house.

Bonus benefit: Once you own the house, you may be able to write off occasional travel expenses you incur when visiting the house (your rental investment).

Endgame: Eventually, your parents won’t be able to live in the house. Then , you can sell it, rent it to another tenant or move in. If you move in and make it your principal residence for at least two years, you can sell it and shelter another $250,000 or $500,000 worth of capital gains: a true bonanza!