What if homes could be created dirt-cheap?

In Austin, Texas a small home for the homeless was created out of a 33-foot machine. But an Italian architecture firm is taking this even further and is conducting experiments to make the process cheaper and more eco-friendly. Instead of making the home with typical building materials, they are using local soil.

Using multiple 3D Print technology, they have created dome-shaped houses out of clay, like adobe, in Ravenna, Italy. Concrete, which is commonly used in home building has a deep carbon footprint, but a soil-built home is environmentally conscious.

The process reduces the transportation needed to make cement because the material is sourced directly on location. The only equipment needed is the 3D Print machine, which is light and can analyze the soil on site.

The soil is excavated and sifted to remove gravel and stones and blended with water and rice husks in a concrete mixer. This makes it solid enough to form viable walls. The mixture is then squeezed out through a nozzle in the printer stacking thin layers that become walls.

Each home is approximately 645 square feet, and the process takes roughly 200 hours to print. There are hopes that it will be an even quicker process in the future.

Watch this video to see how 3D Print homes are built

The walls created by 3D Print technology are strong, and their thickness keeps the homes sufficiently insulated. Light is brought in through a skylight at the top. The team is currently experimenting with new designs with some being adapted to different climates and soil composition.

Where does this technology end?

Although 3D Print homebuilding is futuristic and clever, what type of impact will this have on business and the labor force? Using soil as the primary building material makes it dirt-cheap for sure.

Contractors and craftsmen who design homes may find their jobs becoming eliminated. This will have an impact on the job market, business, and possibly tax collections.

Will payroll tax laws start asserting a fee on equipment used to replace the labor force lost? We will have to see.

The post Is the Future of Housing 3D Print Homes? appeared first on Action Tax.

• Single Filers and Married Filing Separate: $75,000 – $80,000
• Head of Household: $112,500 – $120,000
• Married Filing Joint: $150,000 – $160,000

Reach to Kevin@kevinthompsoncpa.com for more information and guidance on these and other matters affecting your business.

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This may involve more audits for businesses that range from traditional brick and mortar family businesses as well as the influx of newly formed online retail sites launched to offset the pandemic.

The IRS is hiring more auditors who specialize in these types of businesses and will begin enforcing compliance by Feb 2021. Below are tips recommended by ICPAS that you need to be aware of to avoid a costly audit.

1. Make sure your records are accurate and report all income, deductions, credits, expenses, and other items as detailed as possible.
2. Stick to standard deductions. Anything unusual will raise red flags for auditors. If you believe uncommon deductions are warranted, check with your CPA first for guidance. For instance, reporting losses for three years or more may cause suspicion and activate an audit.
3. Go for estimated tax payments. If you believe you will owe more than $500 in taxes for your business, make quarterly estimated tax payments. If you fail to make those payments, you could be risking an examination and penalties.
4. Take advantage of digital bookkeeping. There is advanced software available to keep your records secure as well as accurate. This can save time and help your CPA prepare and file your tax returns electronically. It prevents mistakes that could put you at risk for an audit.
5. Know what the rules are. If you have a partnership, find out if yours is subject to the Centralized Partnership Audit Regime. It was introduced by the Bipartisan Budget Act of 2015, which changed IRS partnership audit procedures dramatically.

It is always best to involve your CPA to help you navigate recent tax laws and audit complexities to make the best decisions for your business. They are trained to help small business owners plan ahead for the future. Reach to Kevin@kevinthompsoncpa.com for more information and guidance on these and other matters affecting your business.

The post More Small Businesses Need to Expect an Audit in 2021 appeared first on Action Tax.

However, it’s important that landlords know their rights and how to deal with the moratorium to stay afloat.

As a landlord, you can still file evictions

Just because it is a “moratorium” doesn’t mean that filing evictions is illegal. Legal aid societies will provide copies of affidavits for tenants to sign.  They will be asked if they are the tenant and will hand them a form to sign. They will tell the tenant they do not have to vacate their residence or pay rent for multiple months as long as they sign. As soon as the tenant signs the form the court has to stop the eviction.

These affidavits can be challenged in court so it’s important that landlords and property managers document evidence that can be used in court to help their attorneys. Make sure to ask your attorneys questions as to what your rights are in your individual cases.

Should you lease month to month?

It’s suggested that it may be better, considering current circumstances, to have tenants sign short leases rather than standard 1- year rental agreements. This may depend on what state you live in so check with your attorney before you execute an agreement with a tenant. Be aware that the CARES act is still in place and may affect your decision.

You can sue for rent which is not an eviction

The moratorium only concerns kicking your tenant out but does not prevent you from suing them. You can do this in small claims court but restrictions may depend on your city or state. You can take a judgement against your tenant and when they are working again, you can take a wage garnishment or go after their bank accounts.

Clearly communicate with your tenants in a decided way

Be proactive with your tenants. You may want to clearly state in your rental agreement that if the tenant fails to communicate with you, there will be evidence of a non-monetary fault in the lease.

Make sure to determine the best way this communication will be done. For instance, a millennial tenant may prefer to communicate via text message while an older tenant may prefer written or verbal communication.

In court, don’t depend on your phone for evidence

Unless you want your phone taken away from you do not attempt to show a judge text message communication between you and your tenant. Print out evidence and make duplicate copies.

The moratorium only affects tenants not paying their rent

A tenant is only protected from the moratorium if they are unable to pay the landlord what they owe for rent. However, if they breach their rental agreement for other reasons, you can still evict them.

According to the CDC, a tenant must make payments to the best of their ability up to the full amount of the rent if they can.  They must show they are making their best effort to do so. You can ask them to show them how they are spending their money or how much is in their bank account if they cannot pay.

The affidavit a tenant signs asks them to assure that they have attempted to obtain all available government assistance for rent or housing. All adult and able household members must also sign.

It may make sense to file your eviction case before the tenant signs their affidavit, but make sure to consult your attorney before proceeding.

Do not do evictions by yourself

Consult your attorney and know the rules. There is a $200,000 penalty or fine if you violate the order.

Voter Voice has resources for landlords concerning evictions.

The post What Landlords Need to Know About the Federal Eviction Moratorium appeared first on Action Tax.

Applications will be accepted by the SBA on a limited basis through community financial institutions. The timing has been confusing causing stress on small business owners and their advisers.

AICPA President and CEO Barry Melancon says he believes the full program will go live ASAP. CPA firms need to be prepared and ready. It’s expected that there will be enough funding to meet first and second draw PPP applications.

The CPA Business Funding Portal platform was launched for CPA firms by AICPA, CPA.com, and BIZ2Credit in September to help assist small businesses with PPP loan forgiveness. Thousands of firms have been using it and it has been recently updated to handle PPP2 applications with over 3,000 applications processed.

Know that small businesses should expect more scrutiny in this next round. The SBA will be doing more vetting for potential fraud and may require further validation.  It is advised that businesses as well as their financial advisers get it right to avoid delays that may cause them to resubmit.

A free service is available through the portal as well as tiered subscription services for CPAs that provides a direct path to fund SBA approved loans that will allow them to receive their agent fees.

Business owners are advised to work closely with their CPAs to ensure they qualify and receive the maximum loan amount they are eligible for and to make sure the correct documents are in order.

Original Source

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What is worse than high taxes on your income? NO income!

And no income is what you might have should you become disabled. What if you suffer a serious accident or succumb to a devastating illness? Will your income continue? From where?  And how much will it be?

Probably the most overlooked part of one’s overall financial plan is this issue of Long-Term Disability. It is confusing. It changes when we change jobs. If we have coverage at work, we often have very low amounts of coverage.

Let’s look at the basics. First, if you are sick or injured and out of work for a week or two, or perhaps even a month, you probably have sick pay and personal days off that can be used to provide your income. And, if you are paying into your state’s short term disability program, you will have some minimal coverage there, for a minimal amount of time. *  By the way, if you are NOT paying “SDI” through your paycheck, then you don’t have this short term state coverage. This often happens with self-employed individuals. They don’t know they have to deliberately select it, and pay into it!  (See bottom of the page for help on this.)

But this is all short-term. What if you are disabled for 3 years, 10 years or for the rest of your working life?! Will you have enough income to maintain your lifestyle? This is a huge gap for most working people. They don’t know what they have or don’t have. They often have little or NO long term disability coverage. And unfortunately, their advisors are not looking deeply into this and providing advice. What are the most common reasons people become disabled for long periods of time?

• Arthritis and other musculoskeletal problems. …
• Heart disease. …
• Lung or respiratory problems. …
• Mental illness, including depression. …
• Diabetes. …
• Stroke. …
• Cancer. …
• Nervous system disorders.
• Accidents (automobile, sports, home, etc.)

Here, let me state this clearly and simply: you need the maximum amount of disability insurance that you can obtain from an insurance company (the maximum they will usually issue, is about 75% of your current income). If you have the standard 60% of base income at work through your employee benefits program, great. But that is almost always not enough. Did you know this coverage does not go with you when you change jobs? Did you know it does not cover bonuses, stock options or 401(k) matching. It only covers your “base” income, and usually only at 60%. Worst of all, if your company pays for it, that seems nice now, but if you collect, that 60% will be fully taxable. If YOU pay for it, the income will be fully tax free. Do you know how yours works?  

What about Social Security Disability Income (SSDI)? Can’t I just count on this? You may, or may not be able to collect this insurance. Many people need to hire attorneys to seek these payments, as they are often hard to obtain, even if you are legitimately disabled.  Even if you are found eligible, the average monthly payout is only $1271/month. Can you live on that? The good news is that SSDI will continue to pay (assuming your disability is ongoing) until your Social Security retirement is available.

This, as you can tell, is an ongoing planning issue, one that needs to be evaluated and dealt with every year (as jobs change, incomes change, spouses’ incomes change, etc.). If you don’t have someone to have this conversation with you annually, I can introduce you to good people who WILL have the right conversations with you. Send me a note.

I probably should add here that we are talking about Long Term Disability insurance, which pays you income if you cannot work. This is different than Long Term Care insurance, which pays for your cost of care, should you need someone to come into your home to provide care (usually as we get older), or for a home-care facility. I will cover this in an upcoming blog.

• California Short Term Disability will pay for a maximum of 52 weeks. If you make $128,298 or more, you can collect up to $1357/week. SDI is usually not taxable.
• If you are self-employed and would like to enroll in CA State Short Term Disability, here is the form: https://www.edd.ca.gov/pdf_pub_ctr/de1378di.pdf

Let’s make 2021 the year where we all take personal responsibility for our life insurance, disability insurance, and for long-term care. We can help you.

The post Disability Income appeared first on Action Tax.

Kevin Thompson CPA says “the problem is, it’s going to be hard to determine if a call is legitimate or a fraud because the callers will be from third party companies. I laud this effort by the IRS. I’d like to see this underfunded bureaucracy utilize public-private partnerships to make them more efficient. They’d also have the opportunity to become more in touch with taxpayers and resolve many of these collection matters.”

The Better Business Bureau has been voicing concern about calls from the IRS because of the trust factor. Thompson says “there’s a lot to do here to reduce the opportunity for crooks to continue to mislead US taxpayers.”

Crooks have been using spoofing technology to convince victims they are from the IRS which has cost victims a pretty penny. The scam makes them think they owe back taxes and they are told to wire the money to avoid arrest or deportation.  It cost taxpayers over $50 million dollars in 2016. Thompson says “these guys called me on my mobile. I agreed that I owed back taxes and asked them for their account number so I could wire into their account. Of course, the reply was for me to give them my information. I laughed and said, “not in this lifetime.”

The BBB is concerned that scam artists will align themselves with third party companies and take advantage of the situation to further bilk innocent taxpayers. “This is fraught with failure,” says Thompson. “How will the unassuming taxpayers know?”

The IRS will use four different private and contracted collection agencies who will call those who owe back taxes and direct them to pay using the website IRS.gov.  They will not ask for payment, wire transfer, or prepaid payment card. Also, taxpayers will receive a written notice in the mail before receiving a call. “How long until the crooks start out sending the letters?” said Thompson. “This has to be comprehensively structured and reviewed.”

Still, the public is urged to be vigilant about taking any supposed calls from the IRS that seem suspicious or demand payment directly.

Collection agencies may begin the calling process immediately so be forewarned. Make sure you receive a letter first from the IRS and do not wire or pay using a gift card. Thompson says “I hope this is amazingly successful and leads to other Public-Private partnerships with the IRS. This would include working with the tax preparation profession for a more timely and orderly process to resolve controversy.

Right now, a taxpayer receives correspondence from the IRS regarding differences between the information contained on their tax returns and information provided to the IRS by third- parties. Of course, the IRS always assumes that the third-party information is correct and sends a detailed report including a proposed balance due. The report will give the taxpayers 30 days to respond before the balance is sent to tax court for resolution.” Thompson goes on to say “the challenge is the IRS does not have the resources to open and reply to this correspondence in 30 days. Often, it takes 8-12 weeks for the service to respond to your communication. Unfortunately, the IRS does not put a collection hold on the account awaiting their own internal resolution. And once this matter gets procedural, most taxpayers and their representatives are outmanned and lose to technicalities not to evidence.”

As for the first foray into these partnerships, the IRS will keep taxpayers updated about scams and include tips on how to protect yourself from cons. For more information, visit IRS.gov and look for the “Tax Scams and Consumer Alerts” page. Thompson advises, “Don’t venture down this path without your representation. It would be fun to tour the Amazon but not without a tour guide.”

If you have a tax collection or other controversy matter, please contact Thompson CPA.

The post Will Calls from the IRS be Real or Fake? appeared first on Action Tax.

She introduced herself to him as he was standing in the lobby and mentioned that she had read his remarks and was concerned about them. She told him it was causing her to lose sleep. Thompson says “I can see where this might be disconcerting to young professionals. A wise man like Cuban might be onto something. And if this is your career of choice, you might have to sweat thinking about it.”

He laughed and they had a short 10-minute conversation to clear things up.  She shared some of the ways that CPA’s have embraced technology to create new ways of servicing clients and that the technology itself allows them to provide better service. It also frees up entry level and junior staff to focus on other responsibilities to serve their customers.

Andrew Chamberlain, the chief economist for GlassDoor, remarked last year that “Even as technology has helped to automate some aspects of the tax and insurance markets, the remaining jobs in those fields require lots of human judgment and creativity that is very difficult to automate.” Thompson says, “this is what I tell my Associates and clients all the time. My 40 years of acumen and experience can enhance technology just as much as technology enhances me.”

This is true in many other industries and professions. Applying expertise as a job function is less likely to be automated than data collection and processing. CPA’s provide individual advice and can analyze data is a much more sophisticated and customized way than ever than before.

One thing a CPA can do is become a key ally in cybersecurity threats. In fact, the AICPA will be releasing a new reporting framework that a company can use to assess the effectiveness of their risk of cyber-attack and the effectiveness of their systems. The reporting framework provides the first common language in the marketplace and aligns with the many ways companies are designing cybersecurity risk management programs.

CPA’s will also be able to aid in some non-financial areas such as vendor/supply chain and sustainability.  This includes energy goals, emission requirements, environmental safety, and water recycling.

These services require specialized knowledge and skills and assure that the accounting profession will still be viable and needed in the future. The demand for these skills is being implemented in the Uniform CPA Exam to reflect competencies that newly licensed CPA’s will need. These are the same skills that Mr. Cuban says are necessary for a profession to go on thriving in the age of advanced technology.

The AICPA, CPA firms, and other stakeholders are always looking for better ways to incorporate technological practical understanding into accounting and auditing services. The AICPA feels that the audit, “the core of the profession”, may transform in the next 5-10 years because of technology and other factors. Thompson says “I believe in technology and I believe that technology will be smart enough to perform more of the audit function.”

CPA’s themselves are working to affect change. Many use technologies such as artificial intelligence, virtual reality, and drones to increase efficiency and become more effective. They no longer must compute information manually and can see and collaborate with companies in real time.

So, Mr. Cuban, you are wrong in assuming the accounting profession is dead. It is very much alive and innovating.

Original Article

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The court concluded that the physician was responsible and acted in a willful manner.  You can still be considered “willful” even if you don’t have an evil motive or intent as in the case of employee embezzlement. Thompson says, “it’s almost evil how onerous and vindictive the IRS penalty structure has become.”

The physician’s business had to shut down operations and remit its remaining receivables to pay the IRS penalty. No matter what the employee did, the owner was responsible. “The IRS justifies this closure by saying that the taxpayer was a bad business owner,” says Thompson.

The IRS gets aggressive when it comes to payroll taxes and some people can face imprisonment when they aren’t paid. The agency is being encouraged to prosecute more payroll violations because it is trust fund money that belongs to the government. The charge is serious.

The IRS doesn’t consider using the money to pay suppliers or to keep the business from closing as a good reason to avoid paying payroll taxes. A payroll service will make sure that an employer doesn’t use the funds inappropriately, but there is still the chance the service may take the money.

It’s important to make sure the payroll service is reputable. If there is a shortfall, the IRS will make personal assessments on everyone who is “responsible” and that includes owners or signatories of the company and its payables. It can assess a Trust Fund Recovery Assessment (100-percent penalty) against everyone who is responsible.

You assume liability even if you have no knowledge that the IRS hasn’t been paid and IRS can go after you personally. The penalty equals the taxes that haven’t been collected. It can also be assessed against all responsible persons to see who comes up with the money first. Thompson says “this is the scariest part of the whole transaction. That Doctor was supposed to know that problem. And the Doctor may have acted like he was in an emergency room – stop the bleeding and then deal with the cause. Unfortunately, as he discovered he tried putting a Band-Aid on a severed limb.”

When all responsible parties face tax bills, they usually try to deflect the blame to someone else. Sometimes one person ends up paying the entire amount while the others pay nothing. Meanwhile, the IRS will still attempt to collect from the company that has withheld on the wages.

To make sure it doesn’t happen again, the IRS may try to shut the company down so the problem doesn’t get worse. It may also seek criminal penalties. However, in most cases, it will seek an injunction to make sure the agency gets its money back and to prevent the company from pyramiding. (going deeper and deeper into debt.)

If a company is only paying back what they owe at a minimal rate, the IRS may try to enforce compliance. The DOJ will seek an injunction to ensure timely deposits and payments of all employment taxes that were withheld and to file all employment tax returns in a timely manner.

Thompson says “payroll and payroll taxes are a serious matter with the Department of the Treasury. Under no circumstances should you fall behind and if you are, get the IRS and your tax attorney involved immediately. Your CPA may be necessary to unravel all of the intricacies of this case but remember that your conversations with your CPA are not confidential or protected.”

It’s important that as a business owner you avoid this type of situation. Make sure to get help as soon as possible and stay abreast of your payroll taxes. Hire a payroll service that will not allow you to use the payroll tax money for anything other than to pay the tax.

Contact your tax preparer for any questions you have regarding this matter.

Original Article

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Generally, the cost of commercial real-estate improvements is recovered over 39 years using the straight-line depreciation method with three exceptions: qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.  Together, these exceptions are known as “qualified real property.”

Qualified real property allows a quicker recovery period of 15 years when using the straight-line method. However, before the PATH act, this was a temporary allowance that was extended periodically. Having most recently expired for property placed in service until after Dec 14, 2014. Thompson says “this is HUGE. Being able to recapture the cost of investments and match it against current income is one of the great advantages to business and property owners. And being able to recapture 24 years sooner is a boon to that sector.”

Property is considered qualified leasehold improvement property if the improvement is made pursuant to a lease, is Sec 1250 property (structural), not the result of a lease between related parties, the interior of the building or portion of it was occupied exclusively by the lessee or sublessee, and it was placed into service more than 3 years after the building was.

Not included is the enlargement of the building, elevators and escalators, structural components that benefit a common area and internal structural framework.

If 50% of a Sec. 1250 restaurant property building’s square footage is devoted to the preparation of meals and has seating for on-premises consumption, it is considered to be qualified.

Retail improvements that are qualified include improvements to inside portions of a nonresidential building open to the public and used in retail trade or the business of selling tangible personal property to the public. Improvements must be placed in service for more than three years after the building has been placed in service.

The PATH act makes the 15-year recovery period permanent. However, this is not elective. If a taxpayer fails to properly depreciate qualified real property over 15 years it puts other 15-year property at risk for reclassification and longer recovery periods. It’s a complicated matter best left to a tax professional. Thompson says “there is no such thing as a permanent tax law. Every administration and every newly seated Congress can write NEW laws that make permanent laws irrelevant. So take advantage while you can. Seldom are tax laws retroactive so use these accelerations to your advantage while you can.”

PATH allows a taxpayer to treat qualified real property as Sec 179 property

The aggregate cost of the qualified real property that a taxpayer can elect to expense was subject to an annual limit of $250,000.  Under the PATH Act, the treatment of qualified real property is extended as Sec. 179 property, applicable retroactively to 2015. Beginning after Dec. 31, 2015, it also removes the annual $250,000 limitation for a qualified real property with a dollar-for-dollar phase-out threshold of $2,030,000 (2017) which continues to apply.

Extension of the Bonus Depreciation

To be eligible for bonus depreciation, an asset must be qualified property. (recovery period of 20 years or less, depreciable software other than Sec. 197 software and water utility property.)

Starting in 2016, the PATH Act substituted for qualified leasehold improvement property a new category of assets called “qualified improvement property.” This is any improvement to the interior part of a building that is nonresidential real property if the improvement is placed in service after the date the building was first placed in service.

This does not include improvements that enlarge a building, any elevator, escalator, or the internal structure of a building.

Quality improvement property is more taxpayer friendly in the larger description of the types of properties that don’t qualify. Qualified improvement property doesn’t require that the improvement be subject to a lease. Any interior improvements made by the owners or an owner-occupied building that meets the other requirements for qualified improvement property will qualify for bonus depreciation.

Removing the lease requirement means that any improvement made to a property in a situation involving a related-party lease could qualify for bonus depreciation.  Improvements made under a related-party lease may not qualify for the 15-year recovery period but may qualify for bonus depreciation. Also, there is no longer a three-year waiting period.

Under the PATH Act, the improvement is eligible for bonus depreciation any time after the building is first placed in service and there is no common area restriction.

For taxpayers who are in the restaurant industry, retail or with business leasehold improvements, PATH Act provisions may be advantageous new ways to claim real property assets or accelerate depreciation. “If you are not having this discussion with your CPA, then have that conversation with this CPA,” says Thompson. “I’m always in the market for smart, new clients keeping up with the times.”

Original Article

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