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Author: tomhammerschmidt

Reminders for the 2018 Tax Filing (and Phishing) Season

The Internal Revenue Service periodically reminds taxpayers and tax professionals to be careful in responding to fraudulent contacts using the IRS name or logo in telephone calls, unsolicited facsimiles, emails, text messages or paper correspondence.  Scammers and other criminals often attempt to impersonate the IRS in an effort to derive payment by debit card payments, wire transfers or (“Wow”) even “gift cards,” or access a taxpayer’s confidential financial information. The IRS has repeatedly emphasized that it does not contact taxpayers by the above methods, other than by correspondence legitimately sent by U.S. mail.  If you have initiated a contact with the IRS about a particular tax matter or have contacted the IRS by telephone, an IRS representative may speak with you but will always identify himself or herself by name and badge number.  Like other phishing scams, never respond to suspicious emails, open attachments or click on links embedded in emails. For further guidance and resources, both as to how to protect yourself and report suspected tax fraud, visit the IRS at https://www.irs.gov/privacy-disclosure/report-phishing. For more information, please contact Tom Hammerschmidt in the Firm’s Ann Arbor office at 734-623-1602, or any of the Firm’s tax specialists located in our Dickinson Wright U.S....

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Resolving Michigan Tax Disputes

Governor Snyder signed a Public Act into law at the end of 2017 permitting a taxpayer and the Michigan Department of Treasury to engage in a settlement process during administrative appeals of Michigan sales tax and corporate and individual income tax assessments.  Taxpayers and the Department had previously been unable to settle tax disputes at the administrative level because Michigan law did not permit the Department to “compromise” taxes. When an assessment or other dispute was in litigation, however, in either the Michigan Tax Tribunal or Court of Claims, the case was capable of “settlement” in negotiations with the Department via the attorney with the Attorney General’s office assigned to the case. A process for initiating settlement discussions is provided in MCL 205.21(e), but the Department has not yet issued further guidance regarding standards for negotiating a settlement.  Therefore, it is not known yet whether this new process will be beneficial to taxpayers, nor the number of matters that might be resolved using the new procedure.  It would seem to provide a new avenue for resolving tax disputes, and may reduce the additional time and expenses of a taxpayer’s professional fees, and costs and efforts on the Department’s side of the equation, by avoiding the filing of litigation solely to permit the settlement process. For more information, please contact Tom Hammerschmidt in the Firm’s Ann Arbor, Michigan office at...

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2017 Tax Act – – Deduction of a Portion of Income from Pass-Through Entities

One of the more interesting, but complicated, provisions of the 2017 Tax Act (also referred to as the 2017 Tax Cuts and Jobs Act) is the provision providing a partial deduction from “qualified business income” received by non-corporate taxpayers from pass-through entities.  This new itemized deduction (i.e., this is not an “above-the-line” deduction) is generally up to 20% of qualified business income. The deduction, however, is subject to limitations based on the taxpayer’s taxable income in excess of net capital gains, and on the business entity’s W-2 wages paid to employees and investment in newly-acquired qualified tangible assets. Taxpayers in most service businesses, such as accountants, lawyers, athletes, artists and healthcare professionals, are eligible for the deduction but are also subject to an additional limitation, a phase-out of the deduction if taxable income exceeds certain thresholds ($157,500 for a single taxpayer and $315,000 in the case of a joint return).  The deduction may not be taken against W-2 wages or guaranteed payments received by the individual from the business. The deduction is available for tax years beginning in 2018 and, like most of the provisions applicable to individuals (but not corporations), does not apply to tax years beginning after 2025. Please contact Tom Hammerschmidt at 734.623.1602 in the Firm’s Ann Arbor office or another Dickinson Wright tax specialist for questions regarding this provision or others in the new Tax...

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Businesses Must Be Aware of Potential State Tax Liabilities

By: Tom Hammerschmidt Many businesses, including Canadian and other foreign businesses, are surprised to learn that they may be subject to income or business activity taxes in various U.S. states notwithstanding the lack of an office, factory or other place of business in a state (called a “permanent establishment” under U.S. bilateral tax treaties). More and more U.S. states are enacting standards of economic presence in a state or “nexus” (as opposed to a “physical presence”), which rule still applies in other states and to certain types of taxes, most notably sales tax. Moreover, states are also adopting “market sourcing” apportionment rules that attribute revenues from services to the state of customer location rather than where the services are performed by the provider. U.S. multistate tax planning and compliance is becoming more complex and it is obviously beneficial for companies to be aware of where they are deemed to be doing business for tax purposes and to plan for state tax costs prospectively instead of facing tax assessments for prior periods. For more information, please contact Tom Hammerschmidt in the Ann Arbor, Michigan office at 734-623-1602 or any member of Dickinson Wright’s state and local tax...

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Tax Blog is published by Dickinson Wright PLLC to inform the public of important developments within the firm and practice areas. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered in this blog.

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