There seems to have been a theme over at the First Class Lounge forum this past week. Watch out for aggressive states! States are going broke and they are going to only get more desperate for funding. And, at the same time, eCommerce is cutting a big hole in their sales tax revenue.
But, don’t forget the IRS. They are still targetting Real Estate Professionals. In fact, I got a private message from a CPA in California who did everything right on his client’s return and he was assess preparer penalties for simply taking the REP deduction on his client’s return. Scariest of all, though, is the IRS’s new challenge of Independent Contractors. If you hire Independent Contractors, or are thinking about it, make sure you read that thread on the First Class Lounge Forum.
Here are some of the highlights regarding states from this past week:
Nebraska and New Mexico are assessing truckers a pro-rata income tax if they just drive through their states. No customers, no stops, no business presence – all they have to do is drive and they get assessed an income tax.
California has tried to claim that simply hiring a CPA located in California is enough reason to pull your business/real estate income into California. (By the way, Megan and I have discussed this at length in the background. If this one gets challenged to the Supreme Court, we’re betting that California won’t win. Meanwhile, though, they can make your life tough.)
New York versus Amazon and Overstock. Thank goodness there are some big boys taking on this fight! New York is trying to assess sales tax on any sale that has just a marginal foothold in the state. As a result, a number of companies no longer allow affiliates in the state of New York. This has really created havoc for some Internet sites.
It’s all over at the forum! If you haven’t yet joined First Class Lounge, now would be a perfect time. There are a lot of tax changes coming up and this is a case of what you don’t know, can hurt you.