Andy Powers-A Professional who cares..About YOU!
NY Businesses Face $10,000 Fine Unless They Pay $50 For New Sales Tax Authority Certificate By 2/1/2010
Attention NY small business owners-Your sales tax Certificate of Authority expires on 2/1/2010 and if you don't pay NYS extortion money of $50 to renew your CoA by then NY says that they may impose a $10,000 penalty if you do business without the new CoA. This is part of the many "HIDDEN" new license requirements (like the salt water fishing license) and increased taxes (disguised as fees) that were secretly legislated by Albany as part of the Governor's 2009 budget. Click here for details.
2009 Sales Tax Deduction on New Car Purchases
Warnings of Higher Taxes to Come-Sooner than you think
As promised by President Elect Obama, the time for change is now, and this means higher taxes for many middle income Americans. No one has a crystal ball; however my prediction is that in 2009 we will definitely see significant tax legislation affecting both businesses and individuals. For individuals I see gradually increasing marginal tax rates on ordinary income (non capital gains or dividends) and a reversal of relief from the onerous alternative minimum tax, with little relief for middle income taxpayers other than those already scheduled to go into effect. This, I expect, will be combined with increased IRS compliance enforcement in their quest to close the Tax Gap by seeking out unreported income and fraudulent tax returns (not a bad thing, I am certain you will agree). Unfortunately it won't stop there. I looking through our old files and I came across a couple of Tax Power newsletters from 2001 and 2002 which discussed tax cuts that were legislated back then. Collectively, these were the largest tax cuts enacted since 1981; however many of these were temporary and contained "sunset" clauses meaning that they will automatically expire by the end of 2010 unless a new Congress made them permanent, which Senator Obama promised would not happen if he was elected President. Below you will find links to these newsletters which you can download and read over coffee tomorrow morning. In one of these newsletters I referred to the 2001 tax cut as a budgetary "slight of hand" which would create a nightmare for tax planners and the American public. I believe that time will prove me true to my prediction. Click here to download the newsletters:
July 1, 2001-Special Report on the Tax Relief Reconciliation Act of 2001
July 1, 2002-Tax and Financial Strategies that Save You Money
There is one tax change that I will be watching closely (and so should you)! This one deals with the repeal of the Estate and Gift Tax provisions which were scheduled to be effective in 2010. Soon after this provision was legislated by Congress, it was realized that this was not only going to result in a huge hole in the budget, it would also be viewed as a discriminatory benefit to the wealthy. The alternative of choice at the time was to create a new capital gains tax on aimed at inherited property. Presently the average middle income family has no need to worry about inheritance tax as it is unlikely that they would receive an inheritance large enough to trigger estate tax. As far as a capital gain tax, being as the tax basis of inherited property has traditionally been the value at the time of inheritance (unlike gifts which have a tax basis going back to the donor), the person (s) inheriting the property could claim a capital gain or loss based on the amount received when the property was sold determined against the value of the property at the time of inheritance. So if you inherited a home valued at $500,000 (that was purchased by, say, your parents for $100,000), and sold it for $500,000, you paid no tax. However, under the law that is scheduled to go into effect in 2010, the recipient's tax basis becomes that of the person or persons bequeathing the property, in the case illustrated, $100,000. This means that when the house is sold for $500,000 there is a $400,000 capital gain.
How the new administration and Congress deals with this will be critical and the worst of all worlds for middle Americans will be a reversion to the inheritance laws that were in effect in 2000 combined with the new Capital Gain Tax for property inherited after 2009 which will create a substantial capital gains tax burden on middle America, especially with the increase in capital gains tax rates that have been promised.