Here at Tax Resolution Center...

Here at Tax Resolution Center...

Tuesday, September 29, 2015

How to Avoid a Sales Tax Audit

One word strikes more confusion and alarm in the minds of small business owners than most others: taxes. With the growth of e-commerce and the related regulations, sales taxes are especially vexing for today’s small business owner.
Tracking your sales tax obligations manually is a gamble. Not fully complying with changing regulations in your city, county, state and beyond could leave you open to scrutiny from auditors. How can you avoid a sales tax audit—or at least minimize the headache should you receive an audit notice? Here are a few pointers:
1.     Equip yourself: Make sure your company has the software necessary to compile and calculate accurate data on your sales tax obligations. Tracking this data by hand in a spreadsheet is not a fool-proof substitute for a comprehensive, automated tool.
2.     Digitize documents: Automated sales tax record-keeping makes it easy for your company to provide documentation of compliance. Well-kept electronic records, especially when it comes to exemption certificates, will help you stay on top of your obligations. Scan relevant documents and maintain them in automated sales tax software.
3.     Stay on top of changes: As a business owner, you’re responsible for keeping track of due dates, rate changes and boundary shifts in the jurisdictions in which you sell goods or services. This becomes difficult if you’re making sales in multiple states. In general, you are responsible for collecting sales tax in states where you have a substantial physical presence. However, the definition of this "nexus" varies between states, and can change if you sell through affiliates, at trade shows, or even have employees in other states. Be smart: There’s no shame in automating or outsourcing this taxing task.

By keeping your company in compliance, you minimize the risk of a damaging audit. Save your business time and money: Stay proactive in your sales tax management!

Monday, September 28, 2015

Migration to EMV Chip Card Technology and Your Small Business

U.S. credit card companies are making the transition from magnetic stripe technology to cards with chips. Chip cards are payment cards that have an embedded chip, offering increased security when your customers use the chip to pay in store.  Chip cards are based on a global card payment standard called EMV, which stands for Europay, MasterCard and Visa, currently used in more than 80 countries around the world.  The United States is now in the process of making the migration to EMV technology.

In an effort to reduce fraud, EMV Chips are becoming the standard for integrated circuit cards (IC cards), IC card capable point-of-sale terminals, and automated teller machines.   Chip card transactions offer advanced security for in-store payments by making every transaction unique.  Chip cards are also much harder to counterfeit or copy.  If the card data and one-time card are stolen, the information cannot be used to create counterfeit cards and commit fraud.

For merchants and financial institutions, the switch to EMV means adding new in-store technology and internal processing systems.  To get chip-enabled for your business, contact your acquirer or payment services provider.

The switch to EMV also means a change in liability for credit card fraud.  Today, if an in-store transaction is conducted using a counterfeit, stolen or otherwise compromised card, consumer losses from that transaction generally fall back on the payment processor or issuing bank, depending on the card’s terms and conditions.

Beginning on October 1, 2015, a deadline set major U.S. credit card issuers including MasterCard, Visa, Discover and American Express, the liability for card-present fraud will shift to whichever party is the least EMV-compliant in certain fraudulent transactions.

Considering a Franchise? Time to Strategize

Do you ever think about buying a franchise? Maybe you’ve heard of big opportunities and want to make a career change or build a business. Before you go further, know this: a franchise is like all investments – there’s no guarantee it will succeed. That’s why it’s important to do research and talk with franchisees and expert advisors before you invest. If you’re considering buying a franchise, the FTC has updated information to help you.
A Consumer’s Guide to Buying a Franchise explains how to evaluate your finances, abilities and goals. You’ll find ideas for ways to shop for a franchise opportunity and key questions to ask. It also explains your rights. For example, under the FTC’s Franchise Rule, a franchisor must give you a Franchise Disclosure Document (FDD) before you pay any money or sign a contract. The disclosure document provides:

·        legal and financial history of the franchisor and its executives
·        the costs to start and operate the franchise
·        the franchisor’s claims about sales, costs and profits
·        contact information for current and former franchisees you can talk with

·        the franchisor’s rules about ending or renewing a contract

Thursday, September 24, 2015

Before You Pass the Torch, Find Out What Your Business Is Worth

Small-business owners invest blood, sweat and tears—not to mention time and money—into their companies. Putting a price tag on all that work may seem impossible. But in fact getting an accurate business valuation is essential to planning for your future, whether that means a succession plan, sale of your business or even your own retirement.
MassMutual recommends checking your company’s worth on a regular basis with a business valuation:
·        A business valuation estimates the economic value of your interest in a business. It is usually used to determine the selling price, the amount needed to fund a buy-sell agreement, or to assign values to individual assets.
·        Your business is probably your most valuable asset and will be an integral part of your retirement plan. It is critical to know how much of your business’ value will be available when you retire.
·        If something unexpected happens to you or your business partner, it could burden your family with tax liabilities for your business. Getting a clear picture of the value of your business can help you prepare your estate plan and tax obligations.

Even though your business means the world to you, you also need to know its value to the rest of the planet. It could make or break your plans for the future.

Monday, September 21, 2015

Troubles at the Postal Service

Key Findings
·        Americans rate the U.S. Postal Service more highly than most other federal agencies. Nevertheless, the Postal Service has serious problems.
·        Although the agency's leadership has engineered a skillful and responsible downsizing, the government-owned enterprise continues losing billions of dollars yearly. Between 2007 and 2014, the Service lost $51.7 billion.
·        For the last three years, the Service has failed to make legally required payments to the U.S. Treasury. The Service indicates it will again default on the statutory obligations, which are for the Postal Service Retiree Health Benefit Fund, in 2015 and 2016.
·        Even though the Service relaxed on-time delivery standards for First-Class and Periodical Mail at the start of 2015, the percentage of mail arriving late has increased dramatically this year.
·        As the Service launches new initiatives in the areas of shipping and packages, there are concerns about whether the Postal Service is losing its focus on what, for public policy reasons and by statute, should be its number one priority: speedy and reliable letter mail delivery.
·        As the Postal Service struggles financially, service reductions have been felt most acutely in rural communities, which are often highly dependent on mail service. If Congress decides to intervene, however, it should be mindful of the Service's precarious finances and not impose expensive new unfunded mandates.


Thursday, September 17, 2015

Their “Debt” Collection Days are Over

Calling people and pushing them to pay debts they don’t really owe?
Posing as law enforcement and fake government agencies like the “Federal Crime Unit of the Department of Justice”?
Threatening to sue or arrest people — or tell their family and employers about a debt?
Reciting people’s Social Security and bank account numbers to seem legit?
Yup, this fake debt collection scheme did it all, illegally collecting more than $5.2 million in fake payday loan debts. Today the FTC announced that under a settlement with the agency, defendant Kirit Patel and his company Broadway Global Master, which processed payments for the scheme, will be banned from the debt collection business, and money recovered will be used for refunds. Patel also has pleaded guilty to the real Department of Justice on charges of criminal mail and wire fraud.
So how can you tell if you’re being targeted by a fake debt collector? A caller may be a fake debt collector if:
  • you don’t recognize the debt
  • you can’t get a mailing address or phone number for the collector
  • you’re asked for personal financial or sensitive information
  • you’re threatened with arrest or told you’ll be reported to a law enforcement agency
You have rights when it comes to debt collection. Tell the caller that you won’t discuss any debt until you get a written "validation notice," which has to include the amount of the debt, the name of the creditor you owe, and your rights under the federal Fair Debt Collection Practices Act.

If the debt is legitimate — but you think the collector may not be — contact your creditor about the calls. Share the information you have about the suspicious calls and find out who, if anyone, the creditor has authorized to collect the debt. If it doesn’t check out, report the call to the FTC and your state Attorney General's office.

Tuesday, September 15, 2015

Tick-tock goes the clock on old debts

Here’s a fun way to think about a tricky topic. You know the scene in Lewis Caroll’s Alice in Wonderland when the white rabbit hops off saying “I’m late! I’m late! For a very important date!”? Imagine the rabbit is a debt collector. The important date? It’s his last chance to legally make you pay money you owe. Why he’s late? The debt collector has run out of time to sue you for an old and unpaid, or time-barred, debt. For more, follow me down the rabbit hole...

What is a time-barred debt? It’s a debt that’s too old for a debt collector to sue you to make you pay. Debt collectors have a limited number of years – called the statute of limitations – to sue you to collect on money you owe. Statutes of limitations vary by state, and by type of debt.

What can I do if a debt collector calls about an old debt? Debt collectors can contact you about time-barred debts at any time. If you get a call from a debt collector, they might come right out and say they can’t take you to court to make you pay a time-barred debt. If a debt collector doesn’t tell you this, ask for the date when you made your most recent payment. Then, ask for a validation notice – a legally required letter detailing the amount owed, and the creditor name. Once you receive the notice, send a letter back within 30 days explaining that you are 'disputing' the debt and that you want to 'verify' it. Debt collectors must stop trying to collect until they give you verification.

What if I’m sued for an old debt? Don’t ignore it. Defend your debt collection rights. Consider talking to an attorney in order to prove that the debt is time-barred, and have the lawsuit dismissed. To do this, you may be asked to provide a copy of the verification from the collector, or any information you have that shows the date of your last payment.

Do I have to pay a time-barred debt? It’s up to you. Here’s what can happen:

  • Pay nothing. Not paying a debt may lower your credit rating. So check your free credit report first to see if a time-barred debt has been reported. If the debt appears on your credit report, this could make it harder and more expensive for you to get credit, insurance, or loans. Debts stay on your credit report for seven years after you stop paying. Although debt collectors can no longer sue you for a time-barred debt, it won’t make it go away. Debt collectors can keep contacting you to pay because you still owe the money. If you want them to stop, send a cease communications letter.
  • Partially pay. If you make, or promise to make, a debt payment, the statutes of limitations clock may reset and your debt will no longer be considered time-barred. A debt collector can then sue you for the full debt amount, plus interest and fees.
  • Pay it off. Before making a full payment, get a signed letter from the debt collector saying that your entire debt is being settled to release you from further obligations.

Debt or debt collection issues on your mind? Talk to us! Write your questions in the comments section below, and we will pick a few to answer. To report a scam, visit

What’s the Difference Between Sales Tax and Use Tax?

If you find sales and use tax compliance confusing (and tedious), you’re not alone. But it’s important for small business owners, and consumers, to understand the difference between sales and use tax to reduce the risk of facing a potentially costly audit.
Leading sales tax automation software company, Avalara, defines sales tax as an “intrastate transaction collected by the seller on the gross receipts from a retail sale.” In other words, the tax consumers pay when they go out to eat or shopping.
Use tax, on the other hand, relies upon self-assessment, and there are two types—seller’s and consumer.
Seller’s tax is required when there is an “interstate transaction, where the seller is compelled to collect tax because of “nexus,” according to Avalara.

The second type of use tax, consumer use tax, must be paid on “purchases of equipment and supplies from out-of-state for use in business.” For example, say Coffee Shop X gets a shipment of coffee cups but allocates a box for complimentary employee use—consumer use tax would need to be paid on that box of materials.

Thursday, September 10, 2015

Become EMV-Ready or Bear the Burden of Credit Card Fraud

About one-quarter of credit card sales are conducted in the U.S. but nearly half of credit card fraud occurs here. Why the disconnect? While the rest of the world adopted more-secure EMV computer-chip based cards, the U.S. continued using traditional credit cards with magnetic stripes, which are more easily cloned by swindlers. Fraud migrated to the path of least resistance.
That’s all about to change. On Oct. 1 all businesses in the U.S. are required to be EMV-ready; otherwise the liability of credit card counterfeit fraud shifts to merchants.
Even merchants who use mobile readers will be impacted by the liability shift and are expected to replace their units with those that are “chip-and-dip” capable. According to Derrick Carpenter, the senior vice president of Industry Solutions and Platforms at Bank of America Merchant Services, new mobile readers are available for $30 to $40 a piece.

When creating a plan for putting the proper EMV equipment in place, Carpenter encourages merchants to ask themselves if they “are running a business highly susceptible to people running counterfeit cards”—key in determining the urgency of equipment upgrade.

Wednesday, September 9, 2015

Streamlined Sales Tax Agreement Simplifies Rates

If you find it mindboggling to keep sales tax rates straight, you’re not alone. There are more than 12,000 taxing jurisdictions throughout the United States, according to tax software company, Avalara. Manually managing the rules for small business owners is nearly impossible.
In a 2000 case, the U.S. Supreme Court found the existing tax structure too complex to hold sellers accountable for collecting sales tax in states where they don’t have a physical location. In response, Congress passed the Streamlined Sales and Use Tax Agreement in 2005 in an effort to begin the arduous process of creating consistency across the 50 states. The agreement’s four main aspects tackle state-level administration, uniform tax base, simplified tax rates and uniform sales sourcing rules.
Since its inception, 24 states have passed legislation to align their sales tax laws with the agreement. It is unclear, however, when the rest of the union will follow suit.

Register for our free webinar, Sales Tax Basics for Small Business Owners, and receive the free e-book “Sales and Use Tax For Dummies: Avalara Special Edition” to fearlessly face the otherwise-overwhelming tax landscape.

Tuesday, September 8, 2015

Do I Have to Have No Debt in Order to Retire?

If you’re thinking about retirement you have to consider several different methods to use the money you have saved in the best way possible.  Since most retirees expect to live on less money every month than they did before they retired, it’s going to be necessary to cut back on the expenses you have now. For a small group of people, this is a fairly easy adjustment.  
Some people are fortunate enough to have a pension that replaces most of their income, or savings that they will be able to withdraw from that will equal their old income level.  In these cases, cutting back is as simple as not buying gas to go to work anymore. The majority of people, however, are not nearly as fortunate.  In these cases, their retirement income will only replace a small portion of what they were making before they quit working.  While it may be possible to withdraw more from savings, take Social Security early, or find a part-time job, most people in this situation will have to figure out how to make significant cuts in their budget. Since most retirees don’t dream of spending their golden years scraping by on pennies, many retirement planners suggest that they look at their debt as an easy place to make cuts.  
Paying off the house, cars, and credit cards means that the bills for these assets won’t have to be paid each month.  That can free up a lot of cash. If you’ve recently retired and are looking at ways to save money, however, odds are good that you just can’t pay everything off at once. Debt consolidation loans are a good way to solve this problem.  These loans can combine all of your existing debts into a single loan with a low monthly payment.  This monthly payment will fit into your new budget, making it possible for you to live on a smaller amount of monthly income.  
If you’re still working, the smaller payment can free up the cash you need to shore up your retirement savings before you quit work. Being able to pay off your debt for less will allow you to actually enjoy your retirement.  Debt consolidation loans can give you a lot of flexibility; if you want to contribute more money later on to get it paid off faster, you can.  Otherwise, just enjoy the freedom that the low monthly payment gives you to travel and pursue hobbies.

A Loan in Sheep’s Clothing: Save Yourself from Predatory Lenders

Predatory lenders’ small print can be downright miniscule, if not missing altogether. Unscrupulous lenders wrap their products in a cloak of promises that are broken as soon as you sign on the dotted line. That’s when unfair terms and hidden fees kick in, causing many small businesses fail.
To make sure you avoid this cycle of debt, work with a lender who’s on board with the Small Business Borrowers' Bill of Rights. This public commitment to small businesses puts the rights of borrowers first and offers complete transparency on pricing and terms. Even better? They communicate in plain, easy-to-read English, so there’s no need to translate finance jargon and legalese.
Next time you’re in need of cash, avoid being snared by a too-good-to-be-true ploy, and take time to look for a lender who has pledged to do business fairly—it could save your business from financial ruin.

Top 10 Tax Tips about Filing an Amended Tax Return

We all make mistakes so don’t panic if you made one on your tax return. You can file an amended return if you need to fix an error. You can also amend your tax return if you forgot to claim a tax credit or deduction. Here are ten tips from the IRS if you need to amend your federal tax return.
1.     When to amend.  You should amend your tax return if you need to correct your filing status, the number of dependents you claimed, or your total income. You should also amend your return to claim tax deductions or tax credits that you did not claim when you filed your original return. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list more reasons to amend a return.

Note: If, as allowed by recent legislation, you plan to amend your tax year 2014 return to retroactively claim the Health Coverage Tax Credit, see IRS.Gov/HCTC first for more information.
2.     When NOT to amend.  In some cases, you don’t need to amend your tax return. The IRS usually corrects math errors when processing your original return. If you didn’t include a required form or schedule, the IRS will send you a notice via U.S. mail about the missing item. 
3.     Form 1040X.  Use Form 1040X to amend a federal income tax return that you filed before. Make sure you check the box at the top of the form that shows which year you are amending. Since you can’t e-file an amended return, you’ll need to file your Form 1040X on paper and mail it to the IRS.

Form 1040X has three columns. Column A shows amounts from the original return. Column B shows the net increase or decrease for the amounts you are changing. Column C shows the corrected amounts. You should explain what you are changing and the reasons why on the back of the form.
4.     More than one year.  If you file an amended return for more than one year, use a separate 1040X for each tax year. Mail them in separate envelopes to the IRS. See "Where to File" in the instructions for Form 1040X for the address you should use.
5.     Other forms or schedules.  If your changes have to do with other tax forms or schedules, make sure you attach them to Form 1040X when you file the form. If you don’t, this will cause a delay in processing.
6.     Amending to claim an additional refund.  If you are waiting for a refund from your original tax return, don’t file your amended return until after you receive the refund. You may cash the refund check from your original return. Amended returns take up to 16 weeks to process. You will receive any additional refund you are owed.
7.     Amending to pay additional tax.  If you’re filing an amended tax return because you owe more tax, you should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.
8.     Corrected Forms 1095-A.  If you or anyone on your return enrolled in qualifying health care coverage through the Health Insurance Marketplace, you should have received a Form 1095-A, Health Insurance Marketplace Statement. You may have also received a corrected Form 1095-A. If you filed your tax return based on the original Form 1095-A, you do not need to file an amended return based on a corrected Form 1095-A.  This is true even if you would owe additional taxes based on the new information. However, you may choose to file an amended return.

In some cases, the information on the new Form 1095-A may lower the amount of taxes you owe or increase your refund.  You may also want to file an amended return if:
·         You filed and incorrectly claimed a premium tax credit, or
·         You filed an income tax return and failed to file Form 8962, Premium Tax Credit, to reconcile your advance payments of the premium tax credit.

Before amending your return, if you received a letter regarding your premium tax credit or Form 8962 you should follow the instructions in the letter.
9.     When to file.  To claim a refund file Form 1040X no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax, if that date is later than the three-year rule.
10.             Track your return.  You can track the status of your amended tax return three weeks after you file with “Where’s My Amended Return?” This tool is available on or by phone at 866-464-2050.
You can get Form 1040X on at any time.

Thursday, September 3, 2015

The History of Labor Day

The first Labor Day holiday was celebrated on Tuesday, September 5, 1882, in New York City, in accordance with the plans of the Central Labor Union. The Central Labor Union held its second Labor Day holiday just a year later, on September 5, 1883.

In 1884 the first Monday in September was selected as the holiday, as originally proposed, and the Central Labor Union urged similar organizations in other cities to follow the example of New York and celebrate a "workingmen's holiday" on that date. The idea spread with the growth of labor organizations, and in 1885 Labor Day was celebrated in many industrial centers of the country.

The form that the observance and celebration of Labor Day should take was outlined in the first proposal of the holiday — a street parade to exhibit to the public "the strength and esprit de corps of the trade and labor organizations" of the community, followed by a festival for the recreation and amusement of the workers and their families. This became the pattern for the celebrations of Labor Day. Speeches by prominent men and women were introduced later, as more emphasis was placed upon the economic and civic significance of the holiday. Still later, by a resolution of the American Federation of Labor convention of 1909, the Sunday preceding Labor Day was adopted as Labor Sunday and dedicated to the spiritual and educational aspects of the labor movement.

The character of the Labor Day celebration has undergone a change in recent years, especially in large industrial centers where mass displays and huge parades have proved a problem. This change, however, is more a shift in emphasis and medium of expression. Labor Day addresses by leading union officials, industrialists, educators, clerics and government officials are given wide coverage in newspapers, radio, and television.

The vital force of labor added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pay tribute on Labor Day to the creator of so much of the nation's strength, freedom, and leadership — the American worker.